The average US household lost $21,261 of net worth this summer, the largest decline in family wealth in nearly three years.
The drop in the third quarter, tied to falling home values and a cratering stock market, is the second straight quarter of eroding wealth, according to the Federal Reserve’s quarterly report released yesterday.
Prior to the back-to-back quarterly declines in household net worth, which wiped out $2.55 trillion of hard-earned wealth from families’ ledgers, Main Street had experienced three straight quarters of growth, the report said.
Household net worth is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.
Consumers began this year ahead of the game with overall net worth of $511,224 per household, which dropped to $498,751 as of Sept. 30 — after an average $9,757 per household gain in the first three months of the year and a $912 decline in quarter two.
Meanwhile, US companies are sitting pretty on a record pile of $2.11 trillion in cash and other liquid assets. That stash grew between July and September by about a half-trillion dollars, the Fed said.
Stock portfolios of all Americans dropped 5.2 percent in the third quarter, while home prices slipped 0.6 percent in the period, the report said. Economists don’t expect home values to rise much for a long as five years.
Consumers have failed to recover from the clobbering of home values due to the recession, which plunged to $16.1 trillion from a peak of $21 trillion in 2007 just ahead of the recession crisis, the report said.
The Fed said about half of the nation's households own stocks or mutual funds, which account for about 15 cents of every $1 of household wealth.
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