A record share of U.S. households now own stocks

The share of American households that own stock either in mutual funds, retirement accounts or as individual shares hit a new high in 2022.

Why it matters: The relatively large share of households with a stake in the stock market is a distinctive feature of American capitalism, setting it apart from other large advanced nations like the U.K., France, Germany and Canada, where equity market participation is much lower.

By the numbers: The Federal Reserve's just-published triennial Survey of Consumer Finances — perhaps the most authoritative look at the financial health of American households — shows that in 2022, about 58% of American households owned stock, either directly or indirectly through mutual funds and other investment accounts.

• That's the highest on record, trouncing the previous high water mark of 53% seen during the dot-com boom and right before the Global Financial Crisis.

Details: The rise in those who own stock directly — that is, by buying individual shares rather than through mutual funds — was a big driver.

• Direct ownership of stocks increased "markedly" between 2019 and 2022, jumping from 15% to 21% — making it the largest change on record, the Fed said in its report.
• That's the highest level of direct ownership of stocks since the early 2000s when it was also 21%.

💭 Matt's thought bubble: This reflects COVID-related changes in behavior among Americans, many of whom first turned to the stock market as a way of scratching a sports gambling itch during the early phase of the pandemic.

• Smartphone-based apps such as Robinhood aimed at younger traders helped build the habit.
• Surging retail stock buying famously became a cultural phenomenon in January 2021, when coordinated retail investors helped drive the share price of GameStop into the stratosphere.

The bottom line: The Fed's data, which was collected during 2022, suggests COVID-era trends in retail stock ownership could stick.