The net worth of U.S. households and nonprofit organizations rose by about 1% quarter over quarter in the first quarter of 2018 to $100.8 trillion according to the Federal Reserve’s Flow of Funds report released Thursday. Household debt rose 3.3% in the quarter with consumer credit growth up by 4.2% annualized and mortgage debt (excluding charge-offs) up at an annual rate of 2.9%. Debt rose by 4.6% in the fourth quarter of 2017.
The value of corporate equities held by households and nonprofits dropped by about $400 billion and the value of real estate rose by $500 million.
The rise in household net worth indicates more consumer purchasing power to help sustain household spending, the largest part of the U.S. economy. The decline in household debt growth reflects a smaller gain in mortgage debt.
Danielle Hale, chief economist at Realtor.com, commented:
Flow of Funds data from the Fed show that the value of owner-occupied real estate has increased by roughly $544 billion and surpassed $25 trillion for the first time ever. The data also showed that owners’ equity hit a new high just shy of $15 trillion ($14.95 trillion) and at 59.7 percent is at the highest level relative to the value of real estate since the fourth quarter of 2005. This is great news for existing owners who can use that equity to remodel or trade-up. The data is also a great reminder of the need to figure out how to make home ownership more accessible to non-owners who miss out on the ability to build up equity in a place of their own.
U.S. companies held $2.66 trillion in liquid assets at the end of the quarter providing the means to raise spending on investment and hiring or the ability to buy back more shares.
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