The Federal Reserve said on Monday household wealth increased $1.9
trillion to $77.3 trillion in the third quarter, the highest level
since records started in 1945.
Though the surge in net worth was encouraging, economists cautioned
against reading too much into the rise as it would have benefited
only the portion of the population with access to equities and those
who owned homes.
"From a consumption perspective, it is actually going to be limited
to folks who hold equities that are feeling the biggest share of the
increase in net worth," said Jacob Oubina, senior economist at RBC
Capital Markets in New York. "Americans still have a long way to go
to get to full financial health."
The value of residential real estate rose by $428 billion between
July and September, and corporate equities and mutual funds were up
by $917 billion over the period, the Fed said.
The U.S. central bank has aggressively used ultra-easy monetary
policy to foster a recovery in the nation's housing market following
a severe 2007-09 recession. That effort has helped propel U.S.
stocks to record highs.
Increases in housing wealth make it easier for families to borrow
against the equity in their homes, while overall wealth gains make
consumers feel generally more comfortable spending their money. Many
economists think consumers spend a few cents of every dollar they
gain in wealth.
During the recession, U.S. consumers cut back sharply as they found
themselves swamped by heavy debts.
The report suggested efforts to pare those debts may have run their
Household debt increased at an annualized 3.0 percent rate in the
third quarter to $13.1 trillion. It was the sharpest run up since
the first quarter of 2008.
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Mortgage debt increased at a 0.9 percent rate to $9.4 trillion in
the third quarter. The last time it rose was in the first three
months of 2009, when it edged up at a 0.1 percent pace.
"It's interesting that household mortgage deleveraging paused in the
third quarter," said Dana Saporta, an economist at Credit Suisse in
New York. "It seems like the mortgage market might be starting to
come out of the persistent deleveraging, maybe starting to normalize
During the third quarter, businesses were sitting on a cash pile of
about $1.93 trillion, up from $1.81 trillion in the prior three
(Reporting by Lucia Mutikani; editing by
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