NCPA - National Center for Policy Analysis

Stocks Increase Household Wealth

March 15, 1999

Stocks now represent one-quarter of total U.S. households' assets, according to new Federal Reserve Board data -- higher than at any time in the post-World War II era. Moreover, the value of those portfolios jumped 20 percent last year, to $10.77 trillion.

As recently as 1984, only eight percent of American's wealth was in stocks.

Here are some other highlights of the Fed's latest "flow of funds" quarterly report:

  • The value of Americans' real estate assets -- $9.22 trillion at year end -- also has risen, but not nearly as much as the value of the stock portfolios.
  • In the last decade, the value of households' real estate increased 55 percent, but the value of their stock holdings jumped 381 percent, not adjusted for inflation.
  • Consumer prices rose by 38 percent over the decade.
  • The collective net worth of U.S. households continued to climb last year, reaching $36.79 trillion -- up $10.2 percent over 1997.

On average, Americans have mortgages that represent 45 percent of all the values of their homes, up from about 35 percent a decade ago.

In measuring household ownership of equities, the Fed includes individual stock, mutual funds and equities held in employee- directed retirement plans. It does not include stock held for workers' benefit in defined-benefit pension plans.

Source: David Wessell, "U.S. Stock Holdings Rose 20 Percent in 1998, Highest Percent of Assets in Postwar Era," Wall Street Journal, March 15, 1999.

 

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