US net worth grew in 2Q for first time since ’07
AP Economics Writer
WASHINGTON – 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 increase in net worth was the first since wealth peaked. According to the Fed report, the pickup was led by gains in stock portfolios. The value of Americans’ stock holdings rose 21.6 percent from the first quarter, marking the first increase in two years.
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. That was the first gain since the final quarter of 2006.
This week, Fed Chairman Ben Bernanke said 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 a record low of 41.9 percent in the first quarter.
The report also showed that total household debt – including mortgages, credit cards, autos and other consumer loans – stood at $13.7 trillion in the second quarter.
That’s down slightly from $13.8 trillion in the first three months of this year, and suggests that households are trimming debt, but are doing so slowly. Debt peaked at $13.9 trillion in the spring of last year.