U.S. Households Took Their Biggest Financial Hit Last Quarter Since the 2008 Crisis

U.S. households lost nearly $4 trillion in net worth last quarter amid the selloff in the stock market, the Federal Reserve said. It marked the biggest one-quarter decline since the financial crisis a decade ago.

The Fed’s quarterly report on U.S. financial accounts said that the net worth of American households declined $3.73 trillion overall to $104.3 trillion in the fourth quarter of 2018. Americans lost a collective $4.6 trillion in the value of their stock holdings during the quarter. That loss was partly offset by a gain in other assets, such as real estate.

U.S. stock indexes plunged for most of the last three months of 2018, with the Dow Jones Industrial Average peaking at 26,828.39 on Oct. 3 and bottoming out at 21,792.20 on Dec. 24, a drop of 18.8%. The declines were spurred on by signs that the Federal Reserve would continue to raise interest rates in 2019 and a looming U.S.-China trade war. Both concerns have been alleviated in the past two months.

The $3.7 trillion drop in household net worth was the biggest loss since the fourth quarter of 2008, when net worth declined by $3.8 trillion as a crisis in housing loans began to spread to Wall Street and threatened the global financial system.

Since Christmas Eve, the Dow has rebounded 16.9%, although it still remains 5% below its peak level last October.