Positive outlook: Household wealth recovers

09 June 2013 11:OO - Mark Maffia

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Positive outlook: Household wealth recovers


American families become wealthier again!   America's wealth figures grew in the first quarter by $3 trillion to an all-time high of §70.4 trillion. This was announced on Thursday by the Federal Reserve. Before recession had began the previous peak stood by $68 trillion in the third quarter of the year 2007.
 

Home prices

About half of the increase was the result of gains in stocks and mutual funds in the first quarter of this year. About one–fourth came from rising home prices, and the rest was due to higher pension fund reserves, greater ownership of cars and lower debts.


Rise in consumer spending

The gains will not be followed by a quick rise in consumer spending as still 11 percent of Americans are poorer than in 2007.


Keeping inflation and population growth in mind, the average household has recovered approximately 63 percent of its lost wealth.   80 percent of the stocks are owned by 10 percent of the wealthiest Americans.
Household wealth means the value of assets like homes, bank accounts and stocks minus loans like for example mortgages.

There is hope that consumers will start spending more money again as soon as consumers’ confidence appears to start growing.


Debts

However, the Fed’s report also shows that money owed in America by households, businesses and the government amounts to about $40.6 trillion, rising at an annual rate of 4.6 percent – but the household debt of about $12.9 trillion was dropping at an annual rate of 0.6 percent.

The government's debt grew but on the other hand, the state-level text collections rose.

 

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