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WASHINGTON
— American households were
$2 trillion
richer on
June 30
than they were three months earlier, the first time in
two years that household net worth has increased, the
Federal Reserve reported Thursday in its quarterly flow
of funds report.
Household
wealth rose in the second quarter at a 17 percent annual
rate, or
$2 trillion
, to
$53.1 trillion
after falling at a 13 percent rate in the first quarter,
the Fed said. It was the first time since the second
quarter of 2007 that wealth had increased. Net worth is
down
$12.2 trillion
from the peak in 2007, an indication of how much the
collapse in stock prices and home prices have hurt.
The
figures are not adjusted for inflation.
Net worth
is defined as assets minus liabilities. Assets rose by
$2 trillion to $67.2 trillion
. Liabilities fell by
$34 billion to $14.1 trillion
.
The rally
on
Wall Street
was the main reason for the increase in household
wealth, but rising home prices contributed as well.
Wealth in corporate equities rose by
$1.04 trillion
, while real estate wealth rose by
$139 billion
. Assets held in mutual funds, life insurance and
pension funds rose by
$1.06 trillion
.
Households
had lost real-estate wealth for nine consecutive
quarters before the second quarter's gain.
Consumers
continued to pay down debts or have their debts written
off at a record pace. In the second quarter, household
debt fell at a 1.7 percent annual rate to
$13.7 trillion
, matching the record percentage decline in the fourth
quarter. Household debt has fallen four quarters in a
row and is down 5 percent from the peak. Before this
recession, household debt had never declined in any
quarter dating back to 1952.
Stimulus
payments boosted disposable incomes by 5.2 percent
annualized to
$10.9 trillion
annually. It was the first increase since the stimulus
payments in the second quarter of 2008. Over the past
four quarters, disposable incomes fell 0.6 percent, the
first year-over-year decline on record dating back to
1952.
Household
debt dropped to 126 percent of disposable income from
128 percent in the first quarter and a record 131
percent in the first quarter of 2008. In 2000, it was 91
percent.
Household
mortgage debt fell 1.4 percent annualized to
$10.4 trillion
, the fifth consecutive decline in mortgage debt.
Consumer credit fell at a 6.1 percent annual rate to
$2.5 trillion
. It was the largest percentage decline in consumer debt
since 1980. In a separate report, the Fed has said
consumer credit declined even faster in July, dropping
at a 10.4 percent annual rate.
Total
debt in the economy grew at a 4.9 percent annual rate,
boosted by massive debts taken on by the federal, state
and local governments.
Federal
government debt rose at a 28.2 percent annual rate, the
fourth straight increase of more than 20 percent. In the
past year, federal debt rose by
$1.9 trillion to $7.2 trillion
. State and local borrowing rose at an 8.3 percent
annual rate in the quarter to
$2.3 trillion
.
Nonfinancial
business debt fell at a 1.8 percent annual rate, despite
a 1 percent increase in corporate debt. The net worth of
nonfarm nonfinancial companies fell at a 17 percent
annual rate, the seventh consecutive decline.
Debt of
domestic financial firms fell at a 12.2 percent annual
rate to
$16.5 trillion
, the largest percentage decline since 1961.
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