Tuesday, June 15, 2010

Household Wealth Up on Improving Financial Assets and Declining Liabilities

The Federal Reserve announced last week that household net worth increased by slightly more than $1 trillion during the first quarter of 2010. This is the fourth consecutive quarterly increase in household net worth. Household net worth at the end of the first quarter totaled $54.57 trillion.

Household net worth is up almost 13 percent from its low at the end of the first quarter of 2009, but is 17 percent below its high at the end of the second quarter of 2007.

According to the Federal Reserve’s Flow of Fund data, two factors contributed to the increase in household net worth during the quarter – an increase in the value of financial assets and a decline in household liabilities. However, tangible assets fell again during the quarter, which negatively impacted household net worth.

Financial assets held by the household sector increased by slightly more than $1 trillion to $45.542 trillion. Equities, mutual fund shares, pension fund reserves, and credit market instruments all posted improvements during the quarter.

However, tangible assets, such as real estate, continued to shed value falling by $67 billion to slightly less than $23 trillion.

The household sector continued to deleverage, as household liabilities fell by almost $100 billion. Mortgage debt fell by $94.1 billion during the quarter, while consumer credit declined by $57.1 billion.

1 comment:

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