Posted on 06/12/2015 7:04:13 AM PDT by SeekAndFind
The net worth of U.S. households rose in the first quarter due to the rising value of homes and investments, a positive sign for the outlook for consumer spending.
The increase added $1.6 trillion to the total wealth of American families, putting it at a new record high of $84.9 trillion, a report by the Federal Reserve showed on Thursday.
While the economy and consumer spending was sluggish in much of the first quarter, the data suggests U.S. households are on a better financial footing and consumers may open their wallets more. Many economists believe that consumers spend a few cents out of every dollar that their net worth increases.
At the same time, Americans also showed signs of being more sheepish about borrowing money. Growth in household borrowing slowed to a 2.2 percent annual rate in the January-March period, the slowest pace since the fourth quarter of 2013.
(Excerpt) Read more at reuters.com ...
Mostly with Monopoly Money!
“Americans also showed signs of being more sheepish about borrowing money.”
Um... cause banks don’t give loans anymore?
Meanwhile government debt is somewhere between 100 to 150 Trillion dollars.
I’m sure the 90+ million un/underemployed will feel better with this news.
So, how does that work. Do people look at home prices and say to themselves “Gee, I think our house may be appreciating a percent or so... so let’s go out and spend money”?
Banks give out plenty of loans and lines of credit if you have a high enough credit score.
It is actually shocking to me how easy it is to get a CC with a 20k limit these days
Expect the rising home values to fuel a new round of home equity iine of credit ( HELOC) lending. While it helps the economy in the short run, it can be devastating when home values fall. Many borrowers take advantage of interest only payments and eventually find themselves without equity in a recession. It’s at this point that government regulations kick in, freezing the line and sometimes requiring the loan to be called. And, as loans are called, real estate values drop and we enter another downward spiral affecting almost all Americans. Paper equity (stocks as well as real estate) is like a free lunch, and everyone knows there’s no such thing as a free lunch. True value is only established when you buy and when you sell, and don’t forget to allow for the government’s share, unjustly earned without risk or sacrifice.
[Banks give out plenty of loans and lines of credit if you have a high enough credit score.]
According to our local realtor, it is next to nil that young people will qualify for home loans and home improvement loans.
Increasing housing prices? Yep, monopoly valuation it is. After the subprime debacle, this is a joke.
I agree....
Probably closer to $210T...
Probably closer to $210T...
But what is $60T to the government?
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