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American Net Worth Fell a Record $4 Trillion at End of 2018

Total American household net worth fell by $4 trillion at the end of 2018, sparking fears that the economy may be headed to a downturn. 

Data from the Federal Reserve in its quarterly Flow of Funds report showed the decline. The drop was “the single largest quarterly dollar drop on record,” according to a blog post on the data by The Big Picture‘s Barry Ritholtz.

“As a comparison, the U.S. bear market losses from 2007-2009 = $11 trillion dollars,” wrote Ritholz.

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Reuters reported Thursday that Fed officials fear the decline could lead to a drop in consumer spending and a corresponding contraction of economic growth for the U.S.

Dips in retail spending at the end of 2018, the report said, added to the fear. 

Not everyone assumes the worst, however. 

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According to CNN, the pinch will be felt disproportionately by the wealthy—leaving most households clear of the impact.

U.S. News and World Report‘s Andrew Soergel, in an analysis, said that despite the loss of $4 trillion, that decline was based in “a woeful Wall Street run to close out 2018,” and that the economy was more likely to continue to grow than not. 

Soergel also pointed to consumer confidence and credit debt as indicators of a growing economy: “credit increases are generally associated with a relatively optimistic consumer whose spending contributes to economic growth.”

Total consumer credit debt, however, indicates there may be more trouble ahead, especially since it just hit a familiar amount: $4 trillion.

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