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Household Wealth - 6/13/14

During the first three months of 2014, U.S. household wealth posted a 10th consecutive quarterly increase.  Though wealth grew more slowly during the January to March period than during the preceding 2 years, the expansion in wealth was enough to allow household wealth to exceed its pre-recession peak in inflation-adjusted, per capita terms.  Gains in wealth accumulation during the first quarter were driven by increases in home equity. 

Stock prices rose only slightly, but the value of stocks and mutual funds held by households still rose 7 percent on an annualized basis during the first quarter.  In part, this was due to a reduction of mortgage debt, which comprises roughly two thirds of all household liabilities.  The value of equity in real estate expanded 17 percent on an annualized basis during 2014’s three initial months. 

According to Moody’s Analytics, wealth is likely to grow at a more modest pace going forward.  House price growth has slowed since last year and is expected to slow further as construction accelerates.  Stock prices are also exhibiting less momentum, at least compared to last year when the stock market was generating massive returns.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.