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

Shobhana Chandra

08 Jun 2018, 12:23 AM IST

(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%

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

--With assistance from Jordan Yadoo.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle