WASHINGTON (AP) — A surging stock market and rebounding
home prices boosted Americans’ wealth to a record in the final three
months of last year, though both trends have slowed so far in 2014.
Household
net worth jumped nearly $3 trillion during last year’s fourth quarter
to $80.7 trillion. Stock and mutual fund portfolios gained nearly $1.7
trillion, or 9 percent, according to a Thursday report by the Federal
Reserve.
The value of Americans’ homes rose just over $400
billion, a 2 percent gain. And checking account balances, pensions plan
assets and retirement savings, such as 401(k)s, also increased.
Strong
wealth gains tend to trigger more consumer spending, a critical fuel
for economic growth. Higher household net worth is one reason economists
have forecast that the U.S. economy will accelerate later this year.
Household
wealth, or net worth, reflects the value of homes, stocks, bank
accounts and other assets minus mortgages, credit cards and other debts.
Last
year, home prices nationwide rose by the most in eight years. And the
Standard & Poor’s 500 index of large stocks jumped 32 percent. So
far this year, home-price gains have slowed, and the S&P 500 has
risen just 1.4 percent.
The Great Recession hammered Americans’
net worth, cutting their overall wealth to $55.6 trillion in the first
quarter of 2009. That was 19 percent below the pre-recession peak of
$68.8 trillion.
U.S. wealth has since recovered. But households
haven’t benefited equally. Much of the rebound stems from stock market
gains. Yet roughly 10 percent of households own about 80 percent of
stocks. Most middle-class wealth stems from home ownership, and house
prices nationwide remain below the peak reached in the spring of 2006.
Still,
rising wealth and an improving economy are encouraging more Americans
to take on debt, which can be a sign of confidence. Total household debt
ticked up 0.4 percent in the quarter, mostly because Americans took out
more auto and student loans.
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