Dave Carpenter, Associated Press, June 10th, 2012
Americans’ wealth rose sharply in the January-March quarter, boosted mainly by the best quarterly gain in stock prices since 1998 and partly by the first rise in home values since 2006.
Household net worth rose 4.7% to $62.9 trillion last quarter, according to a Federal Reserve report released Thursday. The main reason was a 12% jump in the Standard & Poor’s 500 index, which padded the portfolios of Americans who own stocks.
Home values increased 2.3%.
But since March ended, the progress Americans have made to recover the wealth they lost in the Great Recession has hit another bump. Stocks sank 6% in May amid rising fears about Europe’s debt crisis and a weakening US economy. And there’s scant evidence of a sustained housing market recovery despite the rise in home values.
Household wealth, or net worth, reflects the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards. It bottomed during the recession at $49 trillion in the first quarter of 2009. It’s still about 5% below its pre-recession peak of $66 trillion.
The Fed report also found that home mortgage debt, which has been declining since 2008, fell an additional 2.9%. But the drop can be deceiving. Mortgage debt is falling mainly because many Americans have defaulted on payments and lost homes to foreclosure — not just because people are paying off loans.
For most American households, home equity, not stocks, represents their main source of wealth.
“It’s a mixed outlook for the typical household,” says Scott Hoyt, senior director of consumer economics at Moody’s Analytics.
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