WASHINGTON — A jump in the stock market and rising home prices are bringing Americans closer to regaining the wealth they lost in the recession.
U.S. household net worth dipped in the April-June quarter, a Federal Reserve report released Thursday said. But gains in stock and home equity since the last quarter ended likely have raised total household wealth to within 5 percent of its peak before the Great Recession.
Millions of Americans still feeling the effects of the housing bust, or who don't own any stocks, haven't benefited as much.
Still, the increased overall wealth could give people and businesses the confidence to step up spending and boost U.S. economic growth and job creation. That's a goal of the bond-buying plan the Federal Reserve unveiled last week.
Household net worth reflects the value of assets such as homes, bank accounts and stocks minus debts such as mortgages and credit cards. It peaked before the recession at $67.4 trillion.
Tumbling home and stock prices during the recession cost Americans nearly a quarter of their wealth. From a pre-recession peak of $67.4 trillion in fall 2007, household wealth plummeted to $51.2 trillion in early 2009. As of the April-June quarter, it's back to $62.7 trillion.
Bill Hampel, chief economist at the Credit Union National Association, calculates Americans will add $1.5 trillion to $2 trillion to their net worth in the July-September quarter. That would bring net worth to about 4.3 percent below its pre-recession peak.
“We're not there yet, but we're getting close,” Hampel said. “Households are rebuilding their capacity to spend.”
Despite the steady increase in overall U.S. net worth, many Americans have seen little or no improvement. The gains have occurred mainly in stocks, bonds and other financial assets. Fifty-four percent of U.S. households owned no stocks or stock mutual funds at the end of 2011, according to Investment Company Institute data.
Home equity, the primary source of wealth for most American households, has just barely started to recover.
The value of Americans' stock and mutual fund holdings fell a little more than 4 percent last quarter to $14.3 trillion. That lowered net worth by about $320 billion to $62.7 trillion — well above the recession-era low of $9.1 trillion at the end of 2008.
Home equity rose in the second quarter for only the second time since 2006, up 2.1 percent to $16.9 trillion. That's up from a bottom of about $16.1 trillion.
The Fed report also found that: