Household wealth rises for first time since ’07
Stocks helped to lead rebound
WASHINGTON - For the first time in two years, Americans increased their net worth, as household wealth grew by $2 trillion, or about 4 percent, this spring, the Federal Reserve reported yesterday.
The increase ended the longest stretch of quarterly declines on records dating to 1952, the Fed said.
Net worth - the value of assets such as homes, checking accounts, and investments minus such debts as mortgages and credit cards - came to $53.1 trillion for the second quarter.
Stock portfolios rebounded this spring after the market hit its lows for the year in March, and home prices have stabilized.
But the collective American wallet is still almost 20 percent thinner than it was when net worth peaked two years ago.
Some analysts say it could take as long as four years for households to recoup trillions in losses and get back to where they were before the downturn struck in December 2007.
“Households saw $14 trillion of wealth get blown away by the recession, and they recouped $2 trillion of that in the second quarter. That’s good news,’’ said Brian Bethune, an economist at IHS Global Insight.
“But they still have another $12 trillion to go to get back to where they were.’’
Many analysts expect the economic recovery to be lethargic, limiting further gains in the stock and housing markets.
Even if the economy continues to improve, analysts say the erosion of wealth will keep Americans thrifty for years.
In fact, even as wealth grew, Americans trimmed their spending slightly in the spring.
The increase in wealth in the second quarter was led by stock portfolios, the Fed report said. The value of Americans’ stock holdings rose almost 22 percent from the first quarter - the first increase in two years.
Higher home prices helped, too.
The value of real-estate holdings rose 1.8 percent, the first gain since the end of 2006. Home prices are still about 30 percent below their 2006 peak.