Americans Regain Lost Wealth

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    American households have regained almost all of the wealth they lost during the Great Recession, thanks to surging stock prices and recovering home values. Total household net worth – assets minus liabilities – expanded 2.6 per cent, or $1.9 trillion, in the third quarter from the second quarter, says a Federal Reserve report. It was the eighth straight quarter of increases and brought the net worth for households and non-profit organizations to $77.26 trillion at the end of September. The biggest contributor to the latest quarterly gain in wealth was the booming stock market. Household assets in the form of corporate equities and mutual funds jumped by $917 billion, the Fed says. The value of residential real estate owned by households also helped to push up net worth with an increase of about $428 billion. The resulting improvements in net worth should give a boost to consumer spending. People tend to spend more when they see their home and stock values rising. Consumer spending accounts for about 70 per cent of American economic activity, but it has been tepid during the recovery largely because of slow job growth and weak wage gains.