H
ousehold net worth in the US has reached a new record high of nearly $169 trillion, according to the Federal Reserve. This growth is largely due to stock market gains and rising home values, which have added $4.8 trillion to household assets since the third quarter.

    Despite this increase, consumer sentiment remains lukewarm. However, it's likely contributing to continued spending. The wealth effect, where people spend more when their investments and assets rise in value, is at play here. As Eric Freedman, chief investment officer at U.S. Bank, notes, "We have had a gradual, consistent increase in both home prices as well as the stock market that's led to people spending more money."

    The benefits of this growth haven't been evenly distributed, with the top 10% of wealth holders owning roughly 92% of all equity. However, more Americans are participating in the stock market due to increased access through 401(k)s.

    While there is a risk that consumers may overspend and accumulate debt based on paper profits, the current debt-to-assets ratio is near a multidecade low. Economist Tuan Nguyen notes that this lower ratio makes it easier for American consumers to spend without worrying about affordability. However, lower-income Americans are taking on more credit card debt and falling further behind.