U.S. household wealth regains pre-recession peak

WASHINGTON — It took 5½ years.

Surging stock prices and steady home-price increases have finally allowed Americans to regain the $16 trillion in wealth they lost to the Great Recession. The gains are helping support the economy and could lead to further spending and growth.

Household wealth amounted to $66.1 trillion at the end of 2012, the Federal Reserve said Thursday. That was $1.2 trillion more than three months earlier and 98 percent of the pre-recession peak.

Further increases in stock and home prices this year mean that Americans’ net worth has since topped the pre-recession peak of $67.4 trillion, private economists say. Wealth had bottomed at $51.2 trillion in early 2009.

“It’s all but certain that we surpassed that peak in the first quarter,” said Aaron Smith, senior economist at Moody’s Analytics.

Household wealth, or net worth, reflects the value of assets like homes, stocks and bank accounts minus debts like mortgages and credit cards. National home prices have extended their gains this year. And the Standard &Poor’s 500 index, a broad gauge of the stock market, has surged 8 percent since Jan. 1.

Some economists caution that the regained wealth might spur less consumer spending than it did before the recession. Americans are cashing out less home equity, for example, than they did five years ago, notes Dana Saporta, an economist at Credit Suisse.

In addition, the rebound in wealth has benefited mostly wealthier Americans. The Dow Jones industrial average has just set a record high, and roughly 80 percent of stocks are held by the wealthiest 10 percent of households.

For most Americans, home equity is their largest source of wealth, and national home values remain about 30 percent below their peak.

Still, economists expect the regained wealth to contribute further to the economic recovery.

“It should boost consumption, because as people feel wealthier they tend to spend more,” Saporta said. “It doesn’t necessarily mean that households will go on a spending spree.”

Talk to us

More in Herald Business Journal

Site preparation for housing development was underway Tuesday, June 8, at the property known as Frognal Estates near Edmonds. (Chuck Taylor / The Herald) 20210608
Site prep underway at contested development near Mukilteo

The site near Picnic Point recently sold for $24 million after the previous developer filed for bankruptcy.

A portion of the site of the proposed Lake Stevens Costco at the intersection of Highway 9 (right) and South Lake Stevens Road (below, out of view). (Chuck Taylor / Herald file)
Shovel alert: Groundbreaking on Lake Stevens Costco is near

A land sale in early June cleared the way. The mayor says dirt could be flying as soon as next week.

FILE - In this Feb.14, 2019 file photo, an Airbus A380, left, and a Boeing 747, both from Lufthansa airline pass each other at the airport in Frankfurt, Germany. The United States and the European Union on Tuesday appeared close to clinching a deal to end a damaging dispute over subsidies to Airbus and Boeing and lift billions of dollars in punitive tariffs. (AP Photo/Michael Probst, File)
Airbus-Boeing deal eases US-EU tensions but conflicts remain

For now, though, a truce in the Boeing-Airbus dispute goes a long way toward repairing a huge relationship.

The Everett Post Office is shown with a "now hiring" sign in 2019. (Sue MIsao / Herald file)
Washington unemployment rate dipped to 5.3% in May

Private sector employment increased by 7,000 jobs and government employment increased by 1,300 jobs.

Boeing 737 Max airplanes, including one belonging to TUI Group, left, sit parked at a storage lot, Monday, April 26, 2021, near Boeing Field in Seattle.  Lawmakers, on Tuesday, May 18,  are asking Boeing and the Federal Aviation Administration for records detailing production problems with two of the company's most popular airliners. The lawmakers are focusing on the Boeing 737 Max and a larger plane, the 787, which Boeing calls the Dreamliner.  (AP Photo/Ted S. Warren)
Biden administration talking to China on Boeing Max approval

The planes remain banned in the country while other jurisdictions have reauthorized it following crashes.

Pho
You voted: The best pho in Snohomish County

Even during a pandemic, people still have their favorites

Supporters march Wednesday afternoon across from Providence Medical Center in Everett on May 5, 2021. (Kevin Clark / The Herald)
Everett nurses threaten to strike as contract talks stall

Union leaders say Providence’s latest offer includes low wages and cuts to benefits and paid leave.

Bothell man sentenced for illegally trading Amazon stock

He got confidential information from his wife, who was an Amazon finance employee at the time.

Snohomish roofing company fined $1.2M for safety violations

State inspectors noted a dozen “willful serious violations.” Allways Roofing says it will appeal.

Most Read