Date
22 September 2017
Americans were poorer in the third quarter but their real estate assets climbed by US$214.4 billion. Photo: Bloomberg
Americans were poorer in the third quarter but their real estate assets climbed by US$214.4 billion. Photo: Bloomberg

US households poorer in third quarter

Falling stocks and mutual funds drove down household wealth in the United States in the quarter to September.

Families and non-profit groups saw their wealth tumble US$140.9 billion, or 0.2 percent from the previous three months, to US$81.3 trillion, Bloomberg reported Friday, citing the Federal Reserve.

The drop may prove temporary as benchmark stock indices this quarter reached a record, building on years of gains that helped some Americans get their finances in order.

Further growth in household wealth will probably provide an added boost to consumer purchases, which account for 70 percent of the economy, as Fed policy makers consider raising interest rates.

“Net worth has been something that’s supported consumer spending over the last couple of years,” said Laura Rosner, a US economist at BNP Paribas in New York.

“We’ve seen households de-leverage and repair balance sheets and the way that transition was able to occur with pretty steady consumption growth was asset prices and wealth gains that were enormous.”

Household net worth is US$1.3 trillion above its pre-recession peak of US$67.9 trillion reached in the second quarter of 2007.

It was US$81.5 trillion in the three months ended June.

The value of financial assets including stocks and pension fund holdings held by American households fell  US$315.5 billion in the third quarter.

In the fourth quarter, the Standard and Poor’s 500 Index is up 2.7 percent through yesterday.

Household real-estate assets climbed by US$214.4 billion.

Owners’ equity as a share of total household real-estate holdings increased to 53.9 percent last quarter from 53.6 percent in the previous three months.

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