Americans got much poorer last quarter, as their collective household net worth suffered the biggest decline in three years.
The total net worth of American households and nonprofit groups fell by $2.4 trillion in the third quarter of this year, according to a new report from the Federal Reserve. That was a decline of 4.1 percent compared with the second quarter.
Source: Federal Reserve, via Haver Analytics
Wealth declined primarily because the financial markets did poorly. Americans saw big drops in the value of their assets like corporate equities (stocks), corporate and foreign bonds, mutual fund shares and pension fund reserves.
Household real estate assets also suffered, falling in value by $98.3 billion (0.6 percent) from the previous quarter, in nonseasonally-adjusted terms.
Partially offsetting the decline in assets was a smaller decline in household liabilities as families continued to cut back on debt, with the decline in mortgage debt more than offsetting the increase in consumer credit.
Don’t break out the Champagne just yet, though. Total debt for the United States — that is, also including corporate and government debt — hit another all-time high because government borrowing is still outpacing the rate at which households shed debt.
Guess who will ultimately pay back that government debt: American households.
Article source: http://feeds.nytimes.com/click.phdo?i=fadbdd01264aa8046973521994484d27
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