The good news is some of the lost wealth from the stock market has been recovered (for those who are still in the market). The real estate market, on the other hand, has continued to decline in the second quarter. This is a huge loss of wealth and has resulted in the consumer tightening their wallets.-Lou
Household Wealth in U.S. Decreased by $1.3 Trillion
By Courtney Schlisserman
June 11 (Bloomberg) -- U.S. household wealth fell in the first quarter by $1.3 trillion, extending the biggest slump on record, as home and stock prices dropped.
Net worth for households and non-profit groups decreased to $50.4 trillion, the lowest level since 2004, from $51.7 trillion in the fourth quarter, according to the Federal Reserve’s Flow of Funds report today. The government began keeping quarterly records in 1952.
Americans are cutting back on spending as unemployment surges, home prices continue to drop and wealth evaporates, signaling any economic recovery will be slow to develop. The drop in net worth is one reason Americans are boosting savings, blunting the effect of the tax breaks and income supplements from the Obama administration’s stimulus plan.
“It’s going to be very difficult to have any recovery in consumer spending without jobs and incomes recovering first,” said Christopher Low, chief economist at FTN Financial in New York. “The probability of a debt-financed consumer spending binge like we saw in the last expansion is essentially nil.”
Retail sales rose in May for the first time in three months, an increase driven almost solely by U.S. shoppers returning to automobile showrooms seeking bargains and the rising cost of gasoline, a report today from the Commerce Department showed.
Smaller Decline
One positive aspect of today’s Fed report is that the decreases in net worth are starting to ease. Wealth dropped by a record $4.9 trillion in the last three months of 2008.
Americans have taken on less debt as the economic recession unfolds. While the jump in savings rate to 5.7 percent in April was helped by an increase in incomes linked to the fiscal stimulus plan, some economists are forecasting savings will continue to rise as consumers hold back on spending.
Real-estate-related household assets decreased by $551.1 billion, following a $974.5 billion decrease in the fourth quarter. Net worth related to corporate equities fell by $347.8 billion the first three months of this year.
More
Friday, June 12, 2009
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment