By Howard Schneider
WASHINGTON, Oct 9 (Reuters) – The exit from the COVID-19 pandemic raised incomes and wealth for most US families, with income gains concentrated among the less well off but more wealth flowing to the top 10%, a new Federal Reserve survey covering the 2022-2025 period showed.
The Fed’s latest Survey of Consumer Finances, a detailed poll held every three years and covering a representative sample of around 4,300 households nationwide, shows far slower wealth gains than experienced during the volatile pandemic years, when stock markets plummeted and then soared, and households banked trillions of dollars in federal support payments.
The poll was conducted largely from April through May of last year.
With wealth gains moderating, the Fed said, financial stress increased for some.
In an era “of moderate economic expansion and elevated inflation … while most families experienced moderate increases in income and net worth, an increasing subset of families appear to have been experiencing financial stress,” the Fed said.
While income gains were larger for the less well off, they did little to boost their wealth, with the bottom fourth of households seeing their net worth fall more than 50%, from $3,800 as of the last survey in 2022 to $1,700.
Median wealth for Black families, which surged 60% in the 2019-2022 period, posted “a large decline” of 25%, said the Fed, which concluded that the new data “reinforced existing patterns of wealth inequality by family characteristics,” with families that were already wealthy, older, better educated or higher-earning gaining more than others.
Wealth gains were particularly pronounced, up 37%, for families whose main member was older than 75, a generational skew that has shown up in slower family formation and homebuying among younger families.
While household debt remained stable and household leverage — the ratio of debt to assets — declined, signs of debt stress were accumulating through an era of high inflation and rising interest rates.
The median debt payment as a share of income rose 2 percentage points to 15.4%, and the total debt-to-income ratio jumped to 94.9% from 89.4% in 2022. A larger share of families, 8.6% versus 6.5%, had debt payments that ate up more than 40% of their income, the highest reading since the 2013 survey.
MORE CONSUMERS FALLING BEHIND ON LOAN PAYMENTS
The survey captured years when the US was moving beyond the economic volatility of the pandemic toward a “new normal” of more modest wage gains alongside a large run-up in stock market wealth. Some economists have described what’s emerging as a “K-shaped” distribution, with families at the bottom treading water or falling behind, while those with existing assets or higher incomes are moving ahead.
Consumer spending has held up, and the rising debt stress and the use of buy-now, pay-later programs suggest at least a partial explanation.
“The share of families that reported being behind on loan payments sharply increased from about 12% to almost 20%,” the Fed reported, with the share of households using the buy-now, pay-later plans jumping from 7% to 12%.
Overall median family income adjusted for inflation rose 7% to $82,200 during the three-year period, when the tight labor market of the pandemic gradually gave way to a small rise in unemployment.
The larger income rise at the lower end of the income distribution, ranging from 4% to 7% for the bottom 60% of families versus a 6% real income decline for the top 10% of earners, was consistent with conditions in the post-pandemic era, when firms were short of workers, particularly in the services sector, and employers offered pay hikes and bonuses to attract employees to healthcare, restaurant and other “in-person” occupations.
Real median net worth rose 2% to $215,900, and “most families across the net worth and income distributions experienced increases,” the Fed said in a press release accompanying the survey.
The homeownership rate remained stable at about 66%, while participation in the stock market dropped slightly from 58% in 2022 to 56% in 2025.
(Reporting by Howard Schneider; Editing by Paul Simao)
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