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BUSINESS
IHS Inc.

Household net worth jumps $1.3 trillion

Paul Davidson
USA TODAY
  • Rise is fueled by stock market rally%2C housing recovery%2C Fed says
  • Home values increased by %24525 billion
  • Gains have mostly benefited the richest Americans

U.S. household net worth rose 1.8% in the second quarter to a record $74.8 trillion, fueled by a stock market rally and the housing recovery, the Federal Reserve said Wednesday.

The Federal Reserve building in Washington.

Household net worth — the difference between the value of assets like homes and mortgages and other debts — jumped by a total $1.3 trillion. Home values increased by $525 billion and the value of stocks and mutual funds rose nearly $300 billion.

The rising household wealth is helping offset wages that have been stagnant after adjusting for inflation. But the gains have mostly benefited the richest Americans. In 2010, only 31% of households had stock holdings of $10,000 or more, according to the Economic Policy Institute.

During the recession, household net worth bottomed at $52 trillion in the first quarter of 2009, down from a peak of $68.1 trillion in the third quarter of 2007. But households, in aggregate, recovered all the lost value earlier this year.

In the second quarter, Americans' mortgage debt fell by $42 billion while non-mortgage credit increased by $42 billion, leaving total household liabilities virtually unchanged, IHS Global Insight said in a research note.

"If net worth began to fall because of rising household debt, within reason this could be a positive sign for the economy" because it would signify stronger consumer spending, IHS economist Paul Edelstein says.

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