The 2013 household wealth in the United States reflect positive signs of recovery. The Epoch Times report it rose a total of $9.8 trillion, or 14% from the year before.
The Federal Reserve reported the upturn in wealth last Thursday. They said the booming stock market and recovering home values are the primary reasons for the boost in wealth. Within the report, it included that the net worth of households and non-profits was $80.7 trillion at the end of 2013. More than half of that increase, being $5.6 trillion, came from stocks. Real estate holdings rose $2.3 trillion in value.
As for the value of homes, they just rose over $400 billion, a 2% gain. Checking account balances, pensions plan assets, and retirement savings, such as 401(k)s and IRAs, also increased.
Also last year, Americans finally regained the $10.6 trillion in wealth lost in the financial crisis when both stocks and real estate prices collapsed as reported by NBC. According to the Standard & Poor’s 500, the index of large stocks jumped 32%. So far for this current year, home-price gains have slowed down as the S&P 500 has risen only to 1.4%.
By the reports, it looks like the United States is doing well for this year. So why are Americans still suffering? It is because gains have not been equally distributed, mostly among households. Much of the rebound stems from stock market gains. Yet roughly 10% of households own about 80% of stocks, leaving the remaining 90% with practically nothing. Instead, most middle-class wealth stems from home ownership, and the house prices remain below the peak achieved back in the Spring of 2009.
Also, the Fed’s figures do not account for population growth or inflation. This may also put a damper on the numbers themselves.
Despite all of these insecure numbers, the overall positive is this report will benefit the economy. When people feel secure in their finances, they tend to spend more as well as take on more debt. This doesn’t mean Americans will go back to pre-recession habits of building up excessive debt, mostly from borrowing extravagantly at unfixed rates that increase in less than two years. As a matter of fact in general, the biggest debt most Americans have, mortgage debt, fell last quarter. Most of it has to do with the lower mortgage amounts and people opting to rent, mostly through cohabitation, just to split costs.
Just because the household wealth rose to $10 trillion, doesn’t mean we are a-okay. As a matter of fact, simply by the numbers, we still have a long way to go.
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