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Friday, December 12, 2014

Household Net Worth Dipped in the Third Quarter

According to the Federal Reserve’s Flow of Funds report, household net worth in the third quarter of 2014 was $81.3 trillion, a 0.2% decrease ($141 billion) from the previous quarter, yet a 6.7% increase ($5.1 trillion) from the previous year.



Nonfinancial assets of households and nonprofit organizations increased 1.0% from the previous quarter and 5.6% over the previous year. Real estate values contributed to most of the growth, increasing 1.1% from the previous quarter and 6.3% from the previous year.

Financial assets of households and nonprofit organizations declined 0.5% from the previous quarter, yet increased 6.3% from the previous year. The quarterly decline was driven by dips in credit market instruments, corporate equities and mutual fund shares. Household checkable deposits and currency grew, albeit at a slower rate, 3.5% from the second quarter.

Household debt increased 2.7% annually to $13.4 trillion (excluding charge-offs of home mortgages). Net mortgage originations continued to be weak, as mortgage debt edged up slightly from the previous quarter, but was slightly lower than the third quarter of 2013. Consumer credit continued to rise at a solid pace, increasing 2.3% from the previous quarter.

The household savings rate dipped to 5.0% in the third quarter, a 0.1 percentage point decline from the second quarter and 0.2 percentage points below third quarter of 2013.

Nonfinancial business debt rose at an annual rate of 5.2%, similar to the previous quarter. As in recent years, corporate bonds accounted for most of the increase.

Federal government debt increased at an annual rate of 7.2%, up from a 2.5% annual rate in the previous quarter. On the other hand, state and local government debt declined at an annual rate of 2.8% in the third quarter, after increasing at an annual rate of 1.2% in the previous quarter.

Read the Federal Reserve release.

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