A rise in home values and stocks pushed Americans’ wealth to a fresh record high in the first quarter of the year, defying the headwinds of an economy weakened by harsh winter weather.
The household wealth climbed at a fresh high amid improvements in labor market and gains in the stock and residential real estate markets that are giving balance sheets a lift.
According to a report by the Federal Reserve released on Thursday, the net worth of households and nonprofit organizations were up about USD 1.5 trillion or roughly 2 percent between January and March to USD 81.8 trillion, the highest on record.
Meanwhile, the US stock market also showed an upward trend in the first quarter, with the broad S&P 500-stock index rising over 1 percent after a 30 percent gain last year. The value of stocks and mutual funds owned by households rose USD 361 billion last quarter, while the value of residential real estate grew more than twice that, to about $758 billion, according to the Fed.
The positive outlook of the market also encouraged the real-estate values significantly, helping spread the benefits of the nation’s economic improvements. With the real-estate values rising, Americans are gaining more equity in their homes. This in turn is making it easier for the American to sell homes, refinance debts, borrow and spend.
The economists are hopeful that the improvements in household balance sheets would help in boosting the economy that trembled early this year