Household Wealth Surges to New Record

The net wealth of American households has surged to a new record. The increase in housing prices and the rise in the stock market have pushed household net wealth to $48.53 trillion.

In its quarterly “Flow of Funds” report, the central bank said household balance sheet values rose nearly $2 trillion above $46.59 trillion in the third quarter. U.S. household net worth pierced a new record in each of 2004’s four quarters.

One caveat: I don’t know if these numbers have been adjusted for inflation. Also, these numbers are not adjusted for seasonal factors.

Also increasing is that debt is also increasing,

For 2004 as a whole, the Fed said debt incurred by households, non-financial businesses and the federal and local governments rose 8.5 percent compared with 8.0 percent in 2003.

The total level of U.S. non-financial debt outstanding at the end of 2004 was $24.2 trillion, the Fed said, of which government debt made up $4.4 trillion.

Household debt grew 9.4 percent in the fourth quarter after a 11.5 percent expansion in the earlier period. The Fed said the quarterly deceleration reflected slower growth in mortgage debt and consumer credit.

Household debt increased 11 percent for 2004 as a whole, compared with a 10 percent gain in 2003, the Fed said. It attributed the 2004 pickup to higher demand for mortgage debt, as well as a slight rise in consumer credit. (Additional reporting by Michael Flaherty in New York).

FILED UNDER: Economics and Business
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. touche says:

    This is all due to rising home prices and larger mortgages to pay for the homes. Home prices are far outpacing growth in personal income, so this is not sustainable. In fact, the ratio of hh interest payments to hh income is at an all time high even though interest rates are at an all time low. This sure looks like a bubble ready to pop.

  2. ken says:

    And those without a house can increase their net worth just by buying a full tank of gasoline and watching the value skyrocket. Of course this is not what we normally mean by a liquid asset, but still.

  3. Jack Tanner says:

    ‘This is all due to rising home prices and larger mortgages ‘

    Actually accruing large debt would decrease your net wealth.

  4. touche says:

    “Actually accruing large debt would decrease your net wealth.”

    Right, some people sit on their home equity, while others cash in. See Mortgage Debt Increases 13% in 2004 http://calculatedrisk.blogspot.com/2005/03/mortgage-debt-increases-13-in-2004.html