Rejoice: Fed says you're richer this year
The financial crisis may have left you feeling poorer, but the country as a whole is richer than it was two years ago. Americans' wealth increased this spring for the first time in two years, thanks to increases in home values and the stock market, according to the Federal Reserve. But, we're still 19 percent behind the peak reached in the third quarter of 2007.
Net worth in the United States grew by $2 trillion by the end of June 2009, the Associated Press reports. This measure, which represents the difference between assets (e.g., homes, cash and investments) and debts (such as mortgages and credit cards) gained close to four percent from the first quarter of the year. As a result, our country's aggregate net worth hit $53.1 trillion. Of course, we'd all be happier at the fall 2007 level of $65.3 trillion, but the increase at least shows some progress from last year.
The second quarter gain in net worth this year marks the first increase since the high-point two years ago. The 21.6 percent jump in stock holdings is the first move in the right direction in two years, and the 1.8 percent real estate move is the first since the last quarter of 2006. Home equity held also edged higher, from 41.9 percent in the first quarter to 43.1 percent in the second quarter.
Total household debt decreased slightly, from $13.8 trillion in the first quarter of this year to $13.7 trillion in the second quarter. Consumers are addressing their debt, but they are doing so slowly.
So, is it time to celebrate a recovery?
These metrics do suggest that the worst is behind us, but the recovery will take time, especially with unemployment at 9.7% and expected to exceed 10 percent early next year. Retail sales also remain constrained, as consumers proceed with caution in an uncertain job market. We still have a long way to go, but we're no longer looking for the floor. In the meantime, you're richer than you were last year . . . at least according to the data.