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For middle- and lower-income households, home values represent the biggest chunk of total wealth. And home prices remain about 30 percent below their peak, even after jumping nearly 11 percent in the past year. The analysis was written by William Emmons, an economist at the St. Louis Fed, and Ray Boshara, who directs its new Center for Household Financial Stability. "It's like the economy is this airplane and not all the engines are firing," Emmons said. Still, wealthier households account for a disproportionate share of consumer spending: About 20 percent of Americans account for about 40 percent of spending. Consequently, the rise in stock prices should provide some lift to spending, Emmons said. The average household had a net worth of $539,500 at the end of last year, according to a separate paper the St. Louis Fed released Thursday. That was up from $469,900 in the first quarter of 2009. But it was sharply below the peak of $641,000 in the first quarter of 2007.
[Associated
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