US households see wealth grow for first time in nearly 2 years as stocks, homes gain ground

US households see wealth grow for first time in nearly 2 years as stocks, homes gain ground
By JEANNINE AVERSA
Copyright 2009 Associated Press
11:48 a.m. CDT, September 17, 2009
http://www.chicagotribune.com/business/sns-ap-us-net-worth,0,6665244.story


WASHINGTON (AP) — Americans' wealth rose this spring for the first time in nearly two years, with stocks and home values gaining as the recession faded.

Still, household net worth remains about 19 percent below its peak in the third quarter of 2007, before the recession began.

The Federal Reserve said net worth grew by $2 trillion to $53.1 trillion in the April-to-June quarter. Net worth, or the value of assets such as homes, checking accounts and investments minus debts like mortgages and credit cards, rose nearly 4 percent from the first quarter, the Fed said.

Even with the gain, Americans' net worth stands well below the $65.3 trillion it reached two years ago.

The second quarter's increase in net worth was the first since wealth peaked. According to the Fed report, the pickup in wealth was led by gains in stock portfolios. The value of Americans' stock holdings increased by 21.6 percent from the first quarter.

Net worth in the second quarter also was boosted by higher home prices. The value of real-estate holdings rose 1.8 percent, according to the Fed report.

This week, Fed Chairman Ben Bernanke said that the worst recession since the 1930s probably is over. Most analysts say the U.S. economy is growing in the current quarter, which ends Sept. 30, at an annual rate of 3 to 4 percent. The economy shrank at a 1 percent pace in the second quarter, much slower than in previous quarters.

Bernanke warned that the pace of recovery probably won't be brisk enough to generate solid job growth and keep the unemployment rate — now at a 26-year high of 9.7 percent — from rising.

Collectively, homeowners had 43.1 percent equity in their homes in the second quarter, according to the Fed report. That was up only slightly from 41.9 percent in the first quarter.