Household net worth rose by $1.1 billion in the first quarter to $54.4 trillion according to The Federal Reserve, driven to some extend by rising stock prices and a desire by consumers to pay down debt.The Fed also reported that:
Household debt contracted at an annual rate of
2½ percent in the first quarter, the seventh consecutive
quarter of decline. Home mortgage debt fell at an
annual rate of 3¾ percent, a significantly faster decline
than in the fourth quarter, while consumer credit
contracted at an annual rate of 1½ percent.
The fear among consumers that high debt levels could push them beyond the limits of their incomes and falling housing prices probably caused more Americans to aggressively pay down mortgages.
Federal borrowing continued to move up rapidly.
State and local government debt expanded at
an annual rate of 4¼ percent in the first quarter, about
the same pace as in the previous quarter. Federal
government debt increased at an annual rate of 18½
percent in the first quarter, significantly faster than in
the previous quarter, but below the pace seen in 2009 as
a whole.
The data will further fuel concern that governments at all levels are overextended and austerity measures and higher taxes are the only remedy.
Douglas A. McIntyre
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