According to the U.S. Federal Reserve, the net worth of American households declined during the third quarter by the most in four years. This largely reflected a slump in stock prices that ultimately recovered in October. The net worth of U.S. households fell by one point two trillion dollars during the July to September quarter, or by one point four percent.
While stock prices were tumbling for much of this three month period, household debt was edging higher. Household debt expanded at a one point five percent annualized rate during the third quarter, but that represented the slowest pace in almost two years. Growth in so-called consumer credit, which includes auto and student loans, climbed at a seven percent annualized pace.
But mortgage borrowing cooled to a one point six percent growth rate. The value of financial assets owned by households, including stocks and pension fund holdings, fell by one point seven trillion dollars during the third quarter. That’s not surprising.
The Standard and Poor’s five hundred index fell by nearly seven percent during the quarter. The value of real estate assets owned by households expanded by more than four hundred and forty billion dollars, however.
