American household wealth surges to new record--Fed

  1. American household wealth surges to new record--Fed
    Thu Mar 10, 2005 01:05 PM ET

    By Laura MacInnis

    WASHINGTON, March 10 (Reuters) - Rising real estate prices and a resurgent U.S. stock market pushed the net wealth of American households to a record $48.53 trillion in the fourth quarter of 2004, the Federal Reserve said on Thursday.

    In its quarterly "Flow of Funds" report, the central bank said household balance sheet values rose nearly $2 trillion above $46.59 trillion in the third quarter. U.S. household net worth pierced a new record in each of 2004's four quarters.

    Higher values for real estate, equities and mutual funds led the fourth quarter net worth jump, the Fed said. Pension fund reserves and Treasury securities also posted big gains.

    Residential real estate prices, boosted by historically low mortgage loan costs, continued to rise in the fourth quarter to $17.165 trillion and contributed to the gain in wealth.

    Household balance sheets also benefited from buoyant stock markets in the period. The S&P 500 index gained nearly 8.7 percent, the Dow Jones Industrial index rose 7.7 percent and the Nasdaq was up 14.7 percent in the fourth quarter, Reuters data showed.

    Net worth figures are not adjusted for seasonal factors.

    Elsewhere in the report, the Fed said borrowing outside the financial sector rose at a seasonally adjusted 8.3 percent annual rate in the fourth quarter, the same rate as in the prior three months. Third quarter non-financial debt was first reported growing a weaker 7.4 percent rate.

    For 2004 as a whole, the Fed said debt incurred by households, non-financial businesses and the federal and local governments rose 8.5 percent compared with 8.0 percent in 2003.

    The total level of U.S. non-financial debt outstanding at the end of 2004 was $24.2 trillion, the Fed said, of which government debt made up $4.4 trillion.

    Household debt grew 9.4 percent in the fourth quarter after a 11.5 percent expansion in the earlier period. The Fed said the quarterly deceleration reflected slower growth in mortgage debt and consumer credit.

    Household debt increased 11 percent for 2004 as a whole, compared with a 10 percent gain in 2003, the Fed said. It attributed the 2004 pickup to higher demand for mortgage debt, as well as a slight rise in consumer credit. (Additional reporting by Michael Flaherty in New York)
  2. 23 Comments

  3. by   Tweety
    God Bless the republicans!
  4. by   dphrn
    Quote from 3rdShiftGuy
    God Bless the republicans!

    Amen! :chuckle
  5. by   BeachNurse
    Quote from 3rdShiftGuy
    God Bless the republicans!
    Who said anything about Republicans?
    I am confused.
  6. by   SmilingBluEyes
    I keep wondering when the real estate bubble will burst. It will have to, sooner or later.
  7. by   fergus51
    Sure Deb, but it'll be the next guy's fault. Personally I don't know what this all means to me. My net worth hasn't increased much at all since I don't own a home here...
  8. by   SmilingBluEyes
    IT came from the FED, they have their own interests to see to. And I do hear of interest rates climbing again. What better way to justify that??
  9. by   Marie_LPN, RN
    Wealth's not bursting in this house :stone
  10. by   BeachNurse
    I'm not wealthy either! I wonder..which source for this news would be credible to people..?

    My patients who get welfare and food stamps all seem to have at least two TV's and an Xbox or Playstation at their house. Some even have big screen TV's. Must be doing better than I am.
  11. by   fergus51
    You go to their houses?
  12. by   Tweety
    Just being sarcastic Beachnurse, ignore my comment.

    We own a home in an area of Florida where real estate prices have gotten out of hand.

    So my personal wealth has indeed increased as the value of my home has gone up. It's a nice asset to have. But of course I still have most of it owned by the bank. So it's a bit hard to classify that as personal wealth right now.

    My mutual funds in my retirement plan have gone up and down, they've taken a beating and I'll have to check to see if they've grown.

    Cash in my pocket hasn't grown much as any time I get ahead on income lately seems gas prices go up, or I get into debt for some reason. I rarely get ahead in that department.

    It's interesting to note much of the personal wealth increase is fueld by debt.
  13. by   URO-RN
    Hmm. When I pass my old neighborhood, (a poor part of the city) I can see the satellite tv dish...people wearing designer snickers and clothes, expensive jewel(s), expensive cars etc. I guess personal apperance and possesions come before meeting family needs.:stone

    But, back to our regular program.
  14. by   BeachNurse
    Quote from fergus51
    You go to their houses?
    Yes I do..if they don't bring their diary cards back or won't come to clinic for a blood draw, I go out to the house with a social worker. I work with social workers who also go out to our patients' homes and they observe the same.