US household wealth dropped in first quarter as tariff concerns hit stocks

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U.S. financial accounts report, down from $170.9 trillion the prior quarter and the lowest quarter-end level since the middle of last year.It was the first drop in household net worth since the third quarter of 2023 and was largely due to a $2.3 trillion decline in the value of household equity holdings.The value of household real estate holdings also fell, by about $200 billion, as house prices continued a third straight quarter of decline, the Fed said.The drop in household wealth, which had notched record highs in each of the recent quarters, may prove short-lived.The S&P 1500 Composite index, which encompasses the vast majority of the U.S. stock market, shed about $2.5 trillion in value in the first three months of 2025 as investors worried that President Donald Trump's tariffs could drive up inflation, send the economy into recession, or do both simultaneously.With investors encouraged by a tentative U.S.-China trade deal and other signs that tariffs will end up at rates below those initially announced April 2, that broad stock-market index is currently up about $1.2 trillion on a year-to-date basis and is essentially unchanged since Trump took office for a second time on January 20.The Fed's report -- a comprehensive snapshot of the nation's financial condition -- showed total domestic nonfinancial debt grew at a 2.8% annualized rate in the first quarter, compared with the 4.7% pace last year.The slowdown was mostly due to a deceleration in federal government borrowing as the U.S. Treasury used extraordinary measures to stay below the congressionally mandated debt limit, the report said.Private nonfinancial debt picked up, driven by a 4.8% rise in nonfinancial business debt as firms issued more corporate bonds and other debt securities, the Fed said.Growth in household debt, by contrast, slowed to a 1.9% pace in the first quarter, the lowest rate since the first full quarter after the March 2020 shutdowns due to the COVID-19 pandemic.(Reporting by Ann 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