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Households and Their Net Worth

On Thursday, March 8th, 2007 the Federal Reserve issued a report concerning net worth and percentages concerning it. The Federal Reserve said that the net worth of households reached a record high in the final portion of last year, but it was said to be mostly on account of stocks. Net worth is said to be the difference between households’ total assets and their total liabilities, well the net worth totaled to $55.6 trillion in the October-December range last year.

The new numbers marked as a 2.5% increase from the third portion of last year. In 2006 the net worth of a household grew by 7.4% which was a slower rise than what was seen in 2005 at a 7.9% increase. It was said that stocks and real estate gain played vital rolls in these increases.

Household debt was said to have risen by 8.6% in 2006, which was a decrease from a 11.7% rate in the previous year. The Federal Reserve said that this decrease was on account of the “slower growth of home mortgage debt”. The numbers for home mortgage growth slowed to a 8.9% in 2006, which was a decrease from 2005s’ 13.8%. These mortgage debt growth was said to be the smallest increase in six years.

After a five year soar in the housing market hit the bottom, when no one was buying and therefore home prices actually dropped. This made consumers feel more comfortable and made them feel like they had more wealth and more they could spend. Economists stated Thursday that typical household finances are holding up well under the strain of debt and the housing market, not to mention the lack of economic growth. Analysts have also stated that because the “job climate” remains good, that the income growth has therefore increased. From a reliable source at Wachovia bank, FoxNews.com received a statement saying that the slower growth in some of the nations most popular housing markets was just not enough to send the net worth into a decrease. Instead the source said that data has shown that households liabilities are going to grow slowly, while the growth in assets is on a continuous rise.

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