Retailers hope the recovery of some of the nation’s household wealth will be reflected in holiday sales at stores such as this Best Buy in Bowling Green, Ky.

Alex Slitz, Associated Press - Ap

Americans regain some lost wealth

  • Article by: ALEX KOWALSKI
  • Bloomberg News
  • December 6, 2012 - 11:34 PM

WASHINGTON - Household wealth in the U.S. climbed in the third quarter, reflecting increases in stock values and home prices that are helping boost consumer confidence.

Net worth for households and nonprofit groups increased by $1.72 trillion from July through September, or 2.7 percent from the previous three months, to $64.8 trillion, the Federal Reserve said Thursday in its flow of funds report.

A recovery in household wealth, which plunged in the wake of the recession, may put more Americans in the mood to spend during the holidays and give the world's largest economy a lift. Net worth is still below its pre-recession peak, one reason the Federal Reserve is considering additional actions to spur expansion.

"Households have gotten themselves into much, much better financial shape," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. "The ability of consumers to weather a shock is higher because buying power has increased. There's no question that rising home prices are really helping to underpin buying power."

Up $1.3 trillion

The value of financial assets owned by American households, including stocks and pension fund holdings, increased by $1.3 trillion in the third quarter, Thursday's Fed report showed.

More than $800 billion was added to U.S. equity values last quarter. The Standard & Poor's 500 index advanced 5.8 percent from July through September. The index has decreased since, falling 2.2 percent through Wednesday as investors wait to see whether lawmakers will resolve the spending cuts and tax increases in place for next year. The S&P 500 was little changed Thursday as European Central Bank President Mario Draghi said weak activity is expected to continue.

Household real estate assets rose by $301 billion, according to the flow of funds data. Owners' equity as a share of total household real-estate holdings climbed to 44.8 percent last quarter from 43.4 percent.

Multiple measures show U.S. home values are on the path toward recovery. CoreLogic Inc. said last month that single-family home prices climbed 7.6 percent in the third quarter from a year earlier. Home values in the third quarter increased 3.6 percent from the same period in 2011, the biggest gain in two years, according to S&P/Case-Shiller data.

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