US household wealth hits record US$96.9t last quarter

Rising US property values have helped drive US household wealth in the third quarter to another record. — File pic
Rising US property values have helped drive US household wealth in the third quarter to another record. — File pic

NEW YORK, Dec 8 — US household wealth in the third quarter rose to another record, driven by a stock-market surge and rising property values, figures from the Federal Reserve in Washington showed yesterday.

Highlights of Household Wealth Report (third quarter)

Net worth for households and non-profit groups rose by $1.7 trillion (RM6.9 trillion) quarter-on-quarter (q/q), or 1.8 per cent, to US$96.9 trilion from a downwardly revised US$95.2 trillion, according to Fed’s financial accounts report, previously known as flow of funds survey.

Value of financial assets, including stocks and pension fund holdings, increased by US$1.4 trillion to US$78.9 trillion.

Household debt increased at a 3.7 per cent annual rate after 3.8 per cent in the second quarter Household real-estate assets rose by US$444.1 billion; owner’s equity as share of total real-estate holdings climbed to 58.6 per cent from 58.3 per cent.

Key takeaway

The gain in the value of financial assets reflects a 4 per cent rise last quarter in the Standard & Poor’s 500 Index, which is hovering near a record high this month. Households also benefited as house prices climbed 6.2 per cent in September from a year ago, the most since mid-2014, based on S&P CoreLogic Case-Shiller 20-city data.

The spike in net worth bodes well for the purchasing power of those Americans who own stocks and homes, which will help underpin household spending, the biggest part of the economy.

The report also showed companies had an all-time high US$2.4 trillion in liquid assets, up from US$2.3 trillion in the previous quarter and giving them the means to boost investment.

Other details

Mortgage borrowing advanced at a 2.7 per cent pace; other forms of consumer credit, including auto and student loans, climbed at a 4.9 per cent rate.

Total non-financial debt grew at a 6.2 per cent annual pace, the fastest since the fourth quarter of 2015.

Federal government obligations jumped an annualised 10.3 per cent, the most since the final three months of 2015. State and local government debt fell at a 0.1 per cent pace, the third quarterly decline, while business borrowing increased at a 5.4 per cent rate. — Bloomberg

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