Net worth restrained by shaky markets

June 12, 2026

Household net worth posted a muted increase of $113 billion in the first quarter as a shaky stock market weighed on valuations. Despite the negative performance in the stock market, an offsetting increase in nonfinancial assets was enough to push the level of net worth to a new record high of $183 trillion.

Financial assets comprising stocks, mutual funds and pensions lost $1 trillion in the first quarter, affected by the 4.6% drop in the S&P 500 index. The US-Iran conflict weighed on investors’ sentiment that prompted profit-taking. That was offset by a $1.2 trillion increase in nonfinancial assets, mainly consisting of residential real estate. Home prices appreciated 0.5% in the quarter; that helped to lift valuations.

Both the business and household sectors undertook more debt to counter rising inflationary pressures due to the war. Nonfinancial business debt rose at a 7.2% annual rate, the largest increase since 2022. Rising fuel costs have raised operating costs, impacting companies’ bottom lines. Some have been able to mitigate the energy shock via short-term borrowing though one company in the transportation sector was forced into bankruptcy.

Consumer credit grew at a 2.6% annual rate, up from 2.1% in the fourth quarter. This coincided with a drop in the savings rate which fell to 3.2% from 3.6%. That is the third straight quarter for a drop in the savings rate. Consumers are dipping into reserves and undertaking more debt to maintain their lifestyles. Low- and middle-income households are spending more on necessities and less on discretionary items. High-income earners traded down. They increased spending at discounters, off-price retailers and resale shops.

Mortgage debt rose at a 2% annual rate, unchanged from the fourth quarter. That was the slowest rate since 2020 and reflects the frozen housing market. Mortgage lock-in persists, with many owners unable to refinance or trade up at current rates. The recent jump in rates will further raise the bar on those transactions.

We look for the Federal Reserve to raise rates twice to counter expanding inflationary impulses.

Ken Kim

KPMG Senior Economist

Household net worth posted its smallest gain in a year on the back of the weaker performance in the equity market. In the back half of 2026, we look for the Federal Reserve to raise rates twice to counter expanding inflationary impulses stemming from the oil shock. Higher interest rates may dampen the mood of investors as we move into the second half of the year.