U.S. Household Net Worth Soars: Not All Good News?
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Your Money Briefing. Money and market stories from The Wall Street Journal. I'm J.R. Whalen at The Wall Street Journal in New York. U.S. household net worth continues to skyrocket, but it's not all good news. We'll have details in a moment. First, here are some money items you need to know. The Wall Street Journal's economic team says the February employment report keeps the Federal Reserve on track to gradually raise interest rates and, more importantly, suggest officials don't have to worry right now that the economy is overheating. 313,000 non-farm payrolls were added to the U.S. economy in February, and the jobless rate held steady at 4.1%. U.S. mortgage rates have hit their highest level since 2014.
The rate for a 30-year fixed-rate mortgage rose to 4.46%. That's the highest in more than four years, and the ninth consecutive week of increases. At the start of the year, the average rate was 3.95%. And the Wall Street Journal reports the upcoming action movie Red Notice has attracted some of the highest bids of any new movie project in Hollywood in years and has starred Dwayne the Rock Johnson in line for a $22 million payday. Payments to celebrities north of $20 million were common back in the 90s. But they're rare today as studios focus on making movies off the franchises they already control, such as Warner Brothers' Harry Potter and Fox's Avatar. In addition, fewer stars can draw audiences to virtually any film by their name alone.
Rare recent exceptions are stars tied to popular franchise characters, such as Robert Downey Jr. as Iron Man. Coming up, why U.S. household net worth approaching $100 trillion has some people concerned. You're listening to your Money Briefing from The Wall Street Journal. Welcome back, everybody. U.S. household net worth pushed even higher in the fourth quarter of last year, to the tune of nearly $100 trillion. And Wall Street Journal reporter Harriet Torrey joins us from our Washington bureau to analyze the numbers. So, Harriet, household net worth has seen a steep rise in recent years, and last quarter the stock market was a big part of that increase.
That is correct. It was both the stock market and rising home valuations. But the stock market definitely made up the lion's share of that increase in wealth that we saw in the fourth quarter. The report itself, it's called the flow of funds from the Federal Reserve. It presents the data in the aggregate. So we don't really know how this filtered through to the wider economy. The report doesn't specify who exactly this wealth went to. Previous reports from the Fed have suggested that the portion of Americans who hold stocks is actually... concentrated at the top end of the spectrum. So it is a big jump in wealth, but we don't know exactly what this means for the average American.
So there's a concern that's tied to these numbers, and that is how much the household net worth is outpacing Americans' saving rate.
Yes, that is definitely. In fact, through most of 2017, the saving rate fell and on a sort of a month by month basis. And then in this report, we had the number for a whole and it was 3.74% in 2017. That was down from nearly 6% a year earlier and over 7% in 2015. And that's likely due to a number of factors, not least employment is very strong in the US and it has been for several years. So more people have jobs, they're earning money, and they're going out and spending that money.
And there's another bit of a dark cloud here among all the good news, and that's previous stock market busts in the early and late 2000s were preceded by periods of rising asset values and low saving like we're seeing now. And the current wealth to income level surpasses that that we saw in the run up to earlier recessions. But I suppose that based on your story, it's not as pronounced as it was in previous time periods leading up to busts.
Well, that is what some economists are saying, definitely, that household leverage is not as stark as it was during the housing boom. However, it is definitely a standout feature of this report that wealth is now nearly seven times Americans' income.
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