Net worth for households and non-profit groups rose by
More jobs, higher stock prices and improved home values have all helped consumers clean up their balance sheets in the years following the biggest recession since the Great Depression. Additional gains in the labor market and household wealth will be needed to give consumers the means to spend on goods and services, boosting economic growth.
“The gains in wealth are cumulative and they’re likely to have, over time, a more positive effect on consumer spending,” said
The value of financial assets, including stocks and pension fund holdings, held by American households increased by
The Standard & Poor’s 500 Index climbed 9.9% from
An improving housing market also boosted household wealth. The S&P/Case-Shiller national home-price index rose 11.3% in the fourth quarter from the same period in 2012, the biggest year-over-year advance since the first three months of 2006.
Household real-estate assets climbed by
Household net worth was
The Fed is trying to preserve improvements in household net worth by maintaining an accommodative stance, even as it scales back its unprecedented stimulus program.
Fed policy makers will likely keep a close eye on the labor market, where gains have been inconsistent over the past three months. Payrolls grew by 113,000 in January following advances of 75,000 in December and 274,000 in November. They’re projected to increase by about 150,000 in February, according to the median estimate of economists surveyed by
Household debt increased at a 0.4% annualized rate last quarter, today’s Fed report showed. Mortgage borrowing dropped at a 1% pace. Other forms of consumer credit, including auto and student loans, increased at a 5.4% pace.
For all of 2013, household debt climbed 0.9%, the biggest gain since 2007, even as Americans continued to pay down home loans. Mortgage borrowing fell 0.8%, the smallest drop since 2008, which marked the first year of the recession.
Total non-financial debt increased at a 5.4% annual pace last quarter, the most in a year. Federal government obligations jumped by 11.6%, the biggest gain since the first three months of 2012. Business borrowing rose 7.1%. State and local government debt dropped at a 4.9% pace.
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