Despite the economic chaos spurred by the onset of the Covid-19 pandemic in the U.S. — a brief but sharp recession, millions of layoffs and eventually, record-high inflation — consumers have mostly recovered.
In fact, the median U.S. household was nearly $40,000 wealthier in 2021 than in 2019, according to new data from Pew Research. Pew used data from the U.S. Census Bureau’s three latest Surveys of Income and Program Participation to determine how household wealth changed during the pandemic.
U.S. households had a median net worth of $128,200 in 2019, which rose to $166,900 in 2021, Pew found. Figures were calculated using December 2021 prices.
While overall median net worth grew 30%, some groups saw their wealth grow at an even faster clip during the height of the pandemic. Here’s how household wealth changed between 2019 and 2021.
Wealth grew across economic groups, but not evenly
Households from all levels of wealth saw their net worth increase between 2019 and 2021, but those who didn’t have much before the pandemic didn’t see their assets grow nearly as quickly as other groups.
Households in the bottom 25th percentile saw their median net worth jump from $0 in 2019 to $500 in 2021, Pew found. While these households likely held debt both before and after the pandemic, in 2019, about half had no wealth or held more in debt than they did in assets.
Pandemic-era benefits such as stimulus checks, expanded unemployment benefits and child tax credits likely played a role in helping Americans catch up. Additionally, home values skyrocketed during this period, giving homeowners a boost.
Here’s how much median household net worth grew in each wealth quartile, according to Pew’s analysis, which excluded the top 1% and bottom 1% of households.
Bottom 25%
- Median net worth 2019: $0
- Median net worth 2021: $500
- Change: $500
25th to 50th percentile
- Median net worth 2019: $51,300
- Median net worth 2021: $71,000
- Change: $19,700
50th to 75th percentile
- Median net worth 2019: $261,400
- Median net worth 2021: $319,200
- Change: $57,800
Top 25%
- Median net worth 2019: $1,084,300
- Median net worth 2021: $1,256,500
- Change: $172,200
Unsurprisingly, the wealthiest American households saw their assets grow the most between 2019 and 2021.
However, households in the 25th to 50th percentile saw their wealth grow the largest percentage, rising 38% between 2019 and 2021. Median household wealth grew 22% among the 50th to 75th percentile and about 16% among the wealthiest 25th percentile.
1 in 10 American households have a net worth of $0 or less
Though the share of households with no assets or who owe more than they own shrank between 2019 and 2021, it remains fairly common, Pew found. In 2019, 15% of all U.S. households had no wealth or were in debt, compared to 11% in 2021.
That percentage is higher among Black households, however, with 24% having a $0 net worth in 2021, down from 29% in 2019, according to Pew. Asian households are the demographic least likely to have no wealth, with just 7% in that situation.
Across racial and ethnic demographics, multiracial households saw the largest reduction in the share of households without wealth. The share of multiracial households with no wealth fell from 24% in 2019 to 16% in 2021, Pew found.
Having a high income doesn’t necessarily mean a higher net worth, but it can help. The order of racial and ethnic groups ranked by household wealth is the same as the order of these groups ranked by household income.
Should you pay off debt or invest first?
If you have a negative net worth, it can be difficult to juggle getting out of debt with trying to increase your assets.
Some financial experts say you shouldn’t prioritize investing until you’re debt-free. But if you have a lot of debt, that could mean losing out on valuable time that helps your investments grow.
Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth, agrees more time in the market is better. However, he recently told CNBC that “this assumes you don’t need to go to that well and interrupt those investments, that you can actually stay invested.”
He says to tackle high-interest credit card debt “as soon as possible” so that you’re able to then put your money into investments and keep them there.
Ideally, you can strike a balance between getting out of debt and investing — even if you have to start small with your investments. It all depends on your personal situation. If you have debts that are past due, for example, you’ll want to address those as soon as possible to avoid long-term consequences such as damage to your credit score.
Beyond that, your personal money goals may help you decide where your money goes. If you’re close to retirement, you might want to get more aggressive with your debt payoff to avoid bringing those liabilities into your golden years.
DON’T MISS: Want to be smarter and more successful with your money, work & life? Sign up for our new newsletter!