Household worth rises $1.72 trillion in 3rd quarter

WASHINGTON — Household wealth in the U.S. climbed in the third quarter, reflecting increases in stock values and home prices that are helping boost consumer confidence.

Net worth for households and nonprofits increased by $1.72 trillion from July through September, or 2.7 percent from the previous three months, to $64.8 trillion, the Federal Reserve said Thursday from Washington in its flow of funds report.

A recovery in household wealth, which plunged in the wake of the recession, may put more Americans in the mood to spend during the holiday-shopping season and give the world’s largest economy a lift. Net worth is still below its pre-recession peak, one reason the Federal Reserve is considering additional actions to spur expansion.

“If households feel wealthier they’ll tend to spend more,” Dana Saporta, a U.S. economist at Credit Suisse in New York, said before the report. “They’re more likely to go out and spend on cars, go buy a house, which will have a positive reinforcing effect on the economy.”

The value of financial assets owned by American households, including stocks and pension fund holdings, increased by $1.3 trillion in the third quarter, today’s Fed report showed.

More than $800 billion was added to U.S. equity values last quarter. The Standard &Poor’s 500 Index advanced 5.8 percent from July through September. The index has decreased since, falling 2.2 percent through yesterday as investors waited to see whether lawmakers will resolve the spending cuts and tax increases in place for next year.

Household real estate assets rose by $301 billion, according to the flow of funds data. Owners’ equity as a share of total household real-estate holdings climbed to 44.8 percent last quarter from 43.4 percent.

Multiple measures show U.S. home values are on the path toward recovery. CoreLogic Inc. said last month that single- family home prices climbed 7.6 percent in the third quarter from a year earlier. Home values in the third quarter increased 3.6 percent from the same period in 2011, the biggest gain in two years, according to S&P/Case-Shiller data.

Still, Federal Reserve officials are weighing whether to expand record stimulus to increase wealth and promote economic growth. A “number” of central bankers said at their policy meeting in October that the Fed next year may need to expand its monthly purchases of bonds, according to the minutes of the Federal Open Market Committee’s Oct. 23-24 gathering.

Treasury purchases are “associated with increases in stock prices, which in turn can have wealth effects on consumption and investment,” Federal Reserve Governor Jeremy Stein said during a Nov. 30 speech. The FOMC meets again next week.

Thursday’s report showed household debt decreased at a 2 percent annual rate from July to September, the 16th decline in the past 18 quarters. Mortgage borrowing fell at a 3 percent pace. Other forms of consumer credit, including auto and student loans, advanced at a 4.3 percent pace.

Total non-financial debt increased at a 2.4 percent annual pace last quarter, led by a 6.2 percent advance by the federal government and a 4.4 percent gain among businesses. State and local government borrowing was little changed.

bc-us-household

More in Herald Business Journal

Health-care consumers need to take the lead, so get smart

David Russian, CEO of Western Washington Medical Group, writes our third essay about fixing health care.

More business, more competition for Everett kidney dialysis center

Nonprofit Puget Sound Kidney Centers sees large for-profit competitors enter state market.

Molina Medical holds fall carnival for families in Everett

Molina Medical is hosting a free event for families in the Everett… Continue reading

Leadership Snohomish County celebrates 20 years of service

Leadership Snohomish County is celebrating its 20th anniversary. The organization was launched… Continue reading

Snohomish, Monroe manufacturers honored for innovation, excellence

Two Snohomish County companies have been honored with Manufacturing Excellence awards at… Continue reading

Remodeled home tours planned this weekend

This weekend, Edmonds-based Chermak Construction will participate in the 2017 Remodeled Homes… Continue reading

Barron Heating to celebrate anniversary at Marysville showroom

Barron Heating and Air Conditioning is celebrating its 45th anniversary from 10… Continue reading

Robots on Wall Street: Slow-footed regulators lose ground

Watchdogs have to figure out how to check computers running lightening-fast algorithms.

US budget deficit hits $666B, an $80B spike for the year

The deficit issue has largely fallen in prominence in Washington in recent years.

Most Read