Household wealth has risen for two straight quarters, providing some much-needed relief for struggling US consumers.
The value of American homes and investments rose during the third quarter, while debt levels fell modestly, the Federal Reserve reported Thursday.
That brought US households' net worth to $53.4 trillion overall in the Fed survey, which includes nonprofit groups along with families.
That's a solid jump from the first-quarter low in household net worth – $48.5 trillion – but still well below the peak of $64.5 trillion reached prior to the recession.
Consumer spending is driven largely by wages and other income, rather than by fluctuations in the underlying value of homes or stock shares. But economists say a rising net worth can also bolster consumer confidence.
In the Fed survey, the value of household real estate has risen 5.4 percent, to $16.5 trillion, in the six months ending in September. The value of that real estate remains 28 percent below where it peaked in 2006.
Financial assets including stocks and mutual funds rose 10.5 percent during the past two quarters, but remain 13 percent below their 2007 peak.
Meanwhile, households are reducing their debt levels but at a very slow pace. The total amount of mortgage debt is $10.3 trillion, down just 2 percent from when the recession began.
The aggregate numbers provided by the Fed hint at a more complex reality for individual families. Some states have been hit much harder by real estate declines than others, while most US households don't have large investment or retirement accounts.
Stabilizing home prices has been an important part of the Fed's strategy to promote economic recovery. By keeping interest rates low, the Fed is hoping to boost demand for homes, while also buoying home prices so that fewer families feel it is in their interest to default on loans.
Housing experts say nearly 1 in 4 mortgage holders owes more than their home is currently worth. Some forecasters say home prices could still fall further next year.
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