Clear Debt Now

Written by admin on June 25th, 2009

$1.3 Trillion Drop in US Household Wealth

No Comments

In recent news, the figures on U.S. household wealth dropped in the first quarter of 2009 by $1.3 trillion. This is a record-length slump that has serious compromised home and stock prices.

According to the Federal Reserve’s Flow of Funds report, the net worth on houses and non-profit groups decreased to $50.4 trillion, the lowest level since 2004. This is down from the 2008fourth quarter total of $51.7 trillion.

More Americans are reducing their spending as the unemployment rates continue to rise, home prices drop, and overall wealth is fading. The simple fact is that any economic recovery will be slow in coming. As a result of this drop in net worth, people across the country are focusing more on savings, which is affecting the impact of President Obama’s tax break and income supplements that were being distributed via the administration stimulus plan.

The Flow of Funds report also noted that the decreases in net worth were starting to abate. This comes after the severe $4.9 trillion plunge that covered the fourth quarter of 2008.

U.S. consumers have taken on less debt since the recession became a fact. Savings, on the other hand, rose to 5.7% in April 2009. This boost was influenced directly by the income increases provided by the fiscal stimulus plan. Economists predict that savings will continue to rise.

Other figures cited in the report include the decrease of real-estate-related household assets. A $55.11 billion decrease this year came after the $974.5 billion decrease in the 2008 fourth quarter.

Real estate equity was dealt a serious blow as well. A 41.4% decrease last quarter preceded by a 42.9% decrease last year.

Consumer debt dropped at a 1.1% annual pace following a 2% decrease in the last three months of 2008, the first drop on record.

According to the report, mortgage borrowing, interestingly enough, did not show any significant changes from January through March. It marks the first time in a year that it fell. Additionally, the stabilization of real estate lending is another sign that housing slump may be on the way out.

More statistics and percentages made the case that while there are some positive indicators about the economy and household wealth, a long road remains ahead to reach complete recovery.

Related posts:

1. US Stocks Drop As A Result of Devaluing CIT Shares
2. Another U.S. Debt Purchase In The Works
3. The Possibility Of Fiat’s Escape From Debt
4. US Dollar Experienced Increases By Sales On Bonds
5. 5-Year TALF Loans Billed As Real Estate Market Aid