Posted on 06/12/2015 11:27:47 AM PDT by Citizen Zed
A rising stock market and climbing home prices boosted Americans’ net worth to a new high in the first three months of the year.
The Federal Reserve said Thursday that the value of Americans’ stock holdings, real estate, and other assets rose to $84.9 trillion from $83.3 trillion in the final three months of last year. Stock portfolios rose $487 billion, home values by $503 billion.
Still, households remained cautious about borrowing. Total household debt, which includes mortgages, credit cards, auto loans and other borrowing, rose 2.2 percent, the slowest pace since the end of 2013.
The Fed’s figures aren’t adjusted for population growth or inflation. Household wealth, or net worth, reflects the value of homes, stocks and other assets minus mortgages, credit cards and other debts.
Household net worth has steadily recovered after the Great Recession wiped out nearly $13 trillion in wealth. Total net worth has since surpassed the pre-recession peak of almost $68 trillion.
Greater household wealth can lift spending and economic growth. When consumers feel richer, they are more likely to spend from their wealth, rather than just from income.
Yet the typical household isn’t necessarily benefiting. The stock market’s steady climb since it hit bottom in the spring of 2009 has been the primary driver of household wealth. Home prices have increased, but not by as much.
As a result, the rise in total U.S. net worth has primarily benefited wealthier families. Just 10 percent of the richest households own 80 percent of stocks, according to research by Edward Wolff, an economist at New York University. Housing wealth, which is more widely owned, hasn’t recovered as much as the stock market.
However, there were signs that Americans are continuing to repair their finances, which could help the economy in the long run. Low interest rates are making it easier for more households to pay down their debts.
Household debt now stands at 107 percent of Americans’ after-tax income, slightly below the fourth quarter’s reading of 108 percent. That is far below the roughly 130 percent ratio that existed just before the recession. By some measures, however, it remains elevated. It was in the 90 percent range in the 1990s, before the housing bubble.
And rising home prices are helping to rebuild Americans’ ownership of their homes. Home equity was equal to 55.6 percent of the value of U.S. housing in the first quarter, the highest ratio in more than eight years. In the first quarter of 2009, in the depths of the recession, home equity equaled just 36.9 percent of home values.
Record high in devalued dollars.
Exactly.
According to this measure of Monopoly money wealth then Zimbabwe must be the richest nation in the world!
“Record high in devalued dollars.”
Devalued as compared to what other currency?
86 trillion divided by 123.2 million households (census) equals 698 thousand per household.
What, exactly, is the purpose of this trivia?
And always remember, numbers and liberals are not friends.
Really!?
Well I can say THIS Household is more like $6.98...
I’m sure it won’t end in tears this time.
A younger friend who is in MBA school had a finance class where they discussed the Zim hyperinflation. He bought a pile of Zim money on eBay to bring to class to make it more real. Brilliant! Excellent move.
Guess that’s why GDP reading came in at a revised -.07%.
“US household wealth reaches new high of nearly $85 trillion”
WOW!!! Is that average per household?!?
The TV show “Raising Hope” did a very good illustration of libmoneythink during their last season.
Burt decided to print his own money for transactions with his neighbors.
It worked until he got the “Dorkbama” syndrome.
Correction: 85 trillion divided by 123.2 million equals about 689 thousand
“Devalued as compared to what other currency?”
*******
The U.S. Dollar itself. The Fed Reserve has at least tripled the money supply since 2008 (probably quadrupled or quintupled).
Lots of debased dollars out there these days backed by the full faith and credit of an insolvent government.
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