Thursday, June 5, 2014

Household Net Worth Grew by $1.5 Trillion in the First Quarter

According to the Federal Reserve’s Flow of Funds report, household net worth increased by $1.5 trillion in the first quarter of 2014 to a new record of $81.8 trillion. The gain continues an upward trend that began in 2009 and is now $13 trillion above its pre-recession peak.

The gains in household net worth were led by financial assets and real estate. Overall household net worth improved 11% from a year ago, driven by a $2.4 trillion increase in real estate values. Household debt increased by 2.0% in the fourth quarter. Moreover, the S&P 500 grew 19% from the previous year, helping to increase household wealth. Home mortgage debt, however, decreased by 2.5%, signaling that homebuyers remain cautious. Household checkable deposits and currency grew 9% from the fourth quarter, continuing the trend of growing deposits.

In the first quarter, businesses held $1.85 trillion in liquid assets on hand, a decrease from $1.94 trillion in the fourth quarter. Despite the slight decrease, business continue to hold a large amount of cash. Federal government debt increased at an annual rate of 7.1%, a slower pace than the 11.6% in the fourth quarter.

The household savings rate dropped to 3.6% in the first quarter.

Read the Federal Reserve release.

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