Americans saw $1.3 trillion of wealth vaporize in the first quarter of 2009, as the stock market and home values continued to decline, according to a government report released Thursday.
Household net worth fell to $50.4 trillion, according to the flow of funds report by the Federal Reserve. Americans’ stock holdings plunged 5.8% to $5.2 trillion and mutual funds holdings slid 4.1% to $3.3 trillion, while their home value dropped 2.4% to $17.9 trillion.
The nation’s households have now seen their net worth shrink for seven straight quarters. Family net worth had hit an all-time high of $64.4 trillion in the second quarter of 2007, thanks to the housing bubble and a strong stock market.
“It’s more of what we saw late last year,” said Scott Hoyt, senior director of consumer economics at Moody’s economy.com. “Consumers are cutting back on their borrowing to some extent, but the decline in value of assets is swamping that.”
The results are not surprising. The Standard & Poor’s 500 index dropped 11.7% in the quarter, while home values fell 14.2% from the prior-year period, according to Zillow.com.
Though Americans are getting poorer, the rate of decline is slowing. Last year, households’ net worth dropped by a record $10.9 trillion, or 17.4%. It ended the year at $51.7 trillion. The fourth-quarter loss of $4.9 trillion, or 8.6%, was the largest quarterly plunge since the Fed started keeping records in 1951.
Americans also continued to pull back on their borrowing. Household debt fell at an annual rate of 1.1% to $13.8 trillion for the first quarter, after contracting 2% in the fourth quarter of 2008. That was the first time household debt shrank.
Read the rest of the article on CNN Money.
Related articles: