You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • Japan’s exports up in September, deficit persists
      TOKYO – Japan’s trade deficit edged higher in September though exports rose more than expected as the yen weakened to a near six-year low, the Finance Ministry said Wednesday.
  • Kleenex maker plans 1,300 cuts
    DALLAS – Kimberly-Clark plans to eliminate up to 1,300 jobs as part of restructuring efforts aimed at reducing costs and making its business more efficient.
  • McDonald's plans changes as sales slip
    NEW YORK – McDonald's CEO Don Thompson said Tuesday the company hasn't been keeping up with the times and that changes are in store for its U.S. restaurants.
Advertisement

US wealth comes full circle

Household net worth returns to pre-recession levels

– It took 5 1/2 years.

Surging stock prices and steady home-price increases have finally allowed Americans to regain the $16 trillion in wealth they lost to the recession. The gains are helping support the economy and could lead to further spending and growth.

The regained wealth – most of it from stock-market gains – has been flowing mainly to richer Americans. By contrast, middle-class wealth is mostly in the form of home equity, which has risen much less.

Household wealth amounted to $66.1 trillion at the end of 2012, the Federal Reserve said Thursday. That was $1.2 trillion more than three months earlier and 98 percent of the pre-recession peak.

Further increases in stock and home prices this year mean that Americans’ net worth has since topped the pre-recession peak of $67.4 trillion, private economists say. Wealth had bottomed at $51.4 trillion in early 2009.

“It’s all but certain that we surpassed that peak in the first quarter,” said Aaron Smith, senior economist at Moody’s Analytics.

Household wealth, or net worth, reflects the value of assets like homes, stocks and bank accounts minus debts like mortgages and credit cards. National home prices have extended their gains this year. And the Standard & Poor’s 500 index, a broad gauge of the stock market, has surged 8 percent since Jan. 1.

Some economists caution that the recovered wealth might spur less consumer spending than it did before the recession. Dana Saporta, an economist at Credit Suisse, notes that the value of home equity Americans are cashing out has fallen 90 percent in six years.

And since the housing bust, when home values fell broadly for the first time in decades, many homeowners are skeptical that higher prices will last, Saporta said. They won’t necessarily spend more as a result. The upper-income Americans who have benefited most from the nation’s recovered wealth don’t spend as much of their money as Americans overall do.

Advertisement