U.S. Household Wealth Increased at Slower Pace in First Quarter

(Bloomberg) -- U.S. household wealth rose at a slower pace in the first quarter as stocks dropped from a record at the start of the year, figures from the Federal Reserve in Washington showed Thursday.

Highlights of Household Wealth Report (First Quarter)

  • Net worth for households and non-profit groups rose by 1% q/q, or $1.03t, to $100.8t, according to Fed’s financial accounts report, previously known as flow of funds survey
  • Value of corporate equities declined $290b after surging $867b
  • Household debt increased at a 3.3% annual rate after a 4.6% pace at the end of 2017
  • Household real estate assets rose by $432.4b; owner’s equity as share of total real-estate holdings climbed to 59.7% from 58.9%

Key Takeaway

While steady gains in home prices continued to bolster Americans’ wealth, the decline in stock prices tempered the pace. The S&P 500 Index shaved off 1.2 percent last quarter. The 20-city property values index climbed 6.8 percent in March from a year ago, matching February for the biggest year-over-year jump since 2014, according to S&P CoreLogic Case-Shiller data.

Rising net worth bodes well for consumers’ purchasing power and will help sustain household spending, the biggest part of the economy. At the same time, household borrowing grew at a slower pace in the first quarter, reflecting a smaller advance in mortgage debt.

The report also showed companies had $2.66 trillion in liquid assets, giving them the means to boost spending, including on investment and hiring, or the ability to buy back shares.

Other Details

  • Value of financial assets, including stocks and pension fund holdings, increased by $510.6 billion to $81.7 trillion
  • Mortgage borrowing advanced at a 2.9 percent pace, slower than the 3.4 percent rate in the previous quarter
  • Other forms of consumer credit, including auto and student loans, climbed at a 4.2 percent rate after 6.7 percent in the fourth quarter
  • Total non-financial debt, which includes businesses and governments, grew at a 7.2 percent annual pace
  • Federal government obligations expanded 15.3 percent, state and local government debt dropped at a 4.2 percent pace
  • Business borrowing increased 4.4 percent for a second straight quarter

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