Household worth climbs by $2.95 trillion to record
By Victoria Stilwell Bloomberg News
WASHINGTON – Household wealth in the U.S. increased from October through December, as gains in stock portfolios and home prices boosted Americans’ finances.
Net worth for households and nonprofit groups rose by $2.95 trillion in the fourth quarter, or 3.8 percent from the previous three months, to a record $80.7 trillion, the Federal Reserve said on Thursday from Washington in its financial accounts report, previously known as the flow of funds survey.
More jobs, higher stock prices and improved home values have all helped consumers clean up their balance sheets in the years following the biggest recession since the Great Depression. Additional gains in the labor market and household wealth will be needed to give consumers the means to spend on goods and services, boosting economic growth.
“The gains in wealth are cumulative and they’re likely to have, over time, a more positive effect on consumer spending,” said Sam Coffin, an economist at UBS Securities LLC in Stamford, Conn. Looking ahead, gains will be “a bit less rapid, but we do have continued improvement.”
The value of financial assets, including stocks and pension fund holdings, held by American households increased by $2.52 trillion in the fourth quarter, according to Thursday’s Fed report.
The Standard & Poor’s 500 Index climbed 9.9 percent from Sept. 30 to Dec. 31, capping the best yearly gain since 1997.
An improving housing market also boosted household wealth. The S&P/Case-Shiller national home-price index rose 11.3 percent in the fourth quarter from the same period in 2012, the biggest year-over-year advance since the first three months of 2006.