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In recent years, the Federal Reserve has developed a set of measures to better understand the US economy in all its diversity, especially households. As a result, household balance sheets can be calculated per level of income and net worth and the balance sheet’s components, which obviously differ across social strata, can be measured.
The household dataset for the fourth quarter of 2020 was published recently and partially reveals the impact of measures such as sending cheques to households and increasing unemployment benefits. At the end of 2019, the net worth of the least affluent 50% of the population stood at $31,000 on average with a maximum value of $166,000. At the end of 2020, the net worth of these households had risen by 24%.
Meanwhile, their average bank account balance had more than doubled from $1,625 to $3,453.
While the latest data do not include the Biden stimulus plan of transferring $1,400 to people earning less than $75,000 in taxable income (or $150,000 for a household), they indicate the magnitude of the measures that have been taken.
In conjunction with a rapid economic reopening and workforce recovery, it seems likely that a significant portion of the excess savings accumulated during the pandemic will translate into consumer spending.
The following opinion was written on April 2nd 2021 and is susceptible of changing.
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