US household wealth declined by $1.6 trillion in the first quarter of 2025, marking the first drop since 2023 as stock market turbulence and falling real estate values eroded Americans' financial positions.
The Federal Reserve reported Thursday that total household net worth fell to $169.3 trillion as of March 31, down from $170.9 trillion at the end of last year, representing a nearly 1% decline. The decrease came after a period of steady growth in household wealth that had reached record levels.
The S&P 1500 Composite index, which encompasses most of the U.S. stock market, shed approximately $2.5 trillion in value during the first three months of 2025 as investors responded to President Trump's new tariff policies12. This stock market decline accounted for the largest portion of the wealth reduction.
"The S&P 500 ended this quarter with a decline of 4.3% after two straight years of excellent returns with over 20% gains each year," according to Sage Mountain Advisors' quarterly market update3.
Real estate holdings also contributed to the wealth decline, falling by $0.2 trillion during the quarter as property values slipped nationwide41.
Despite the Q1 setback, the wealth reduction may prove temporary. The S&P 1500 has rebounded, gaining approximately $1.2 trillion year-to-date and remains essentially unchanged since President Trump began his second term on January 2012.
The market decline showed an interesting pattern beneath the surface. Nine out of eleven sectors in the S&P 500 performed better than the overall market in Q1, with seven showing positive returns. Technology stocks were hit particularly hard, with growth stocks falling by 10.0% and the Nasdaq 100 dropping by 8.1%3.
While wealth declined, household debt continued to grow, though at varying rates across different categories. The Federal Reserve Bank of New York reported that total household debt increased by $167 billion (0.9%) in Q1 2025, reaching $18.20 trillion1.
Credit card balances provided a bright spot, falling by $29 billion to $1.18 trillion. This decrease follows a typical first-quarter pattern that Bankrate attributes to tax refunds and post-holiday spending reductions2.
Mortgage balances grew by $199 billion to $12.80 trillion, while auto loan balances declined by $13 billion to $1.64 trillion1.
The mixed debt picture comes amid persistent concerns about household financial wellness. A recent St. Louis Fed analysis noted that "in 2023, more than half of U.S. households had little or no discretionary income," a situation that "has remained virtually unchanged since the mid-1980s"3.
