U.S. households slowly regaining wealth

U.S. households slowly regaining wealth
Americans' net worth rose 1.3% in the fourth quarter to $54.2 trillion, the Federal Reserve says. It marked the third straight quarter of gains.
Copyright © 2010, The Los Angeles Times and the Associated Press
March 12, 2010
http://www.chicagotribune.com/business/la-fi-wealth12-2010mar12,0,5673951.story


Washington - Americans are recovering their shrunken wealth -- gradually.

Household net worth rose last quarter, mainly because the healing economy boosted stock portfolios. But the gain was slight. And it was less than in the previous two quarters.

The Federal Reserve said Thursday that net worth rose 1.3% in the fourth quarter to $54.2 trillion. It marked the third straight quarter of gains. Net worth had risen 4.5% in the second quarter of 2009 and 5.5% in the third quarter.

Net worth is the value of assets such as homes, checking accounts and investments minus debts such as mortgages and credit cards.

Even with the gain, Americans' net worth would have to rise an additional 21% just to get back to the pre-recession peak of $65.9 trillion. That illustrates Americans' vast loss of wealth from the worst economic downturn since the 1930s.

Growth in stock portfolios delivered the biggest boost to net worth in the October-to-December period. The value of stocks increased nearly 4% to $7.7 trillion. Higher home prices helped slightly. The value of real estate holdings edged up 0.2%.

During the recession, which began in December 2007, household net worth plunged as low as $48.5 trillion in the first quarter of 2009. Stock holdings and home values nose dived, and as Americans' net worth evaporated, they felt less inclined to spend.

For all of last year, consumer spending dropped 0.6%. This year, as wealth, the economy and financial conditions slowly recover, consumer spending is projected to grow around a modest 2.2%, according to the National Assn. for Business Economics.