US household wealth jumps $2tn

Led by rising stock market

WASHINGTON, Dec 9, (AP): A stock market rally, which has since reversed, propelled US household net worth to a record high of $109 trillion in the JulySeptember quarter.

The Federal Reserve said Thursday that the value of Americans’ stock and mutual fund holdings soared $1.2 trillion. Home values rose $200 billion. Other assets, such as bank accounts, also increased. Total net worth climbed $2 trillion from nearly $107 trillion in the April-June quarter.

Greater household wealth can help the economy by lifting consumer spending. Yet wealth has been increasingly concentrated since the Great Recession, with just 10 percent of US population owning 84 percent of stocks.

Richer households are less likely to spend from additional wealth compared with poorer ones.

The figure reflects the value of assets like homes, bank accounts and stocks minus debts like mortgages and credit cards. The figures aren’t adjusted for inflation or population growth.

Since the July-September quarter covered by the Fed’s report, household wealth has suffered a sharp blow, and may be on track to decline in the final three months of 2018.

The S&P 500 stock market index reached a record high Sept 20, only to fall steadily through October and November. It has also fallen sharply this week over fears of a worsening trade fight between the United States and China and a potential slowdown in US and global economic growth.

On Thursday, the S&P 500 fell another 2 percent in mid-day trading and was 9.8 percent below its peak. That’s very close to the 10 percent decline that constitutes a correction.

The increasing importance of stock ownership to building wealth, compared with owning a home, has exacerbated wealth inequality since the recession. For most middle-class Americans, real estate ownership is the main source of wealth.