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Household Net Worth Recovered 1 17 Billion in 4Q 2012
Household net worth continued its recovery in the fourth quarter, gaining $1.17 billion. Household net worth has been revering steadily since the beginning of 2009 and is now approaching its pre-crisis peak. The fourth quarter’s household net worth is just $1.3 billion short of its 3Q 2007 peak of $64.4 billion. Household net worth rose 9% over 2012.
The improvement was driven primarily by a near $800 billion increase in the value of financial assets that occurred despite stock market declines. The Dow Jones Industrial Average fell 2.5% over the quarter. The increase in the value of financial assets shows households’ increasing willingness to invest, as household holdings of equities surged. The Dow has now surged 9.1% so far in 2013, indicating that improvement in household net worth will likely improve.
Home equity also improved as the housing recovery continued, with net worth receiving a $500 billion increase due to real estate wealth. Home equity as a percentage of household real estate rose to 46.6%, its highest level since the first quarter of 2008.
Liabilities also rose for the household sector as families become willing to take on more debt. Total liabilities rose by about $133 billion, as household debt grew at an annual rate of 2.4% in the fourth quarter.
Read the Federal Reserves Z.1 release.
Household Net Worth Recovered 1 17 Billion in 4Q 2012
The improvement was driven primarily by a near $800 billion increase in the value of financial assets that occurred despite stock market declines. The Dow Jones Industrial Average fell 2.5% over the quarter. The increase in the value of financial assets shows households’ increasing willingness to invest, as household holdings of equities surged. The Dow has now surged 9.1% so far in 2013, indicating that improvement in household net worth will likely improve.
Home equity also improved as the housing recovery continued, with net worth receiving a $500 billion increase due to real estate wealth. Home equity as a percentage of household real estate rose to 46.6%, its highest level since the first quarter of 2008.
Liabilities also rose for the household sector as families become willing to take on more debt. Total liabilities rose by about $133 billion, as household debt grew at an annual rate of 2.4% in the fourth quarter.
Read the Federal Reserves Z.1 release.