Households' net worth rises for first time in 2 years.

RISMEDIA, September 21, 2009—(MCT)—American households were $2 trillion richer on June 30, 2009 than they were three months earlier, the first time in two years that household net worth has increased, the Federal Reserve recently reported.

Household wealth rose in the second quarter at a 17% annual rate, or $2 trillion, to $53.1 trillion after falling at a 13% rate in the first quarter, the Fed said. It was the first time since the second quarter of 2007 that wealth had increased. Net worth is down $12.2 trillion from the peak in 2007, an indication of how much the collapse in stock prices and home prices have hurt. The figures are not adjusted for inflation.

Net worth is defined as assets minus liabilities. Assets rose by $2 trillion to $67.2 trillion. Liabilities fell by $34 billion to $14.1 trillion. The rally on Wall Street was the main reason for the increase in household wealth, but rising home prices contributed as well. Wealth in corporate equities rose by $1.04 trillion, while real estate wealth rose by $139 billion. Assets held in mutual funds, life insurance and pension funds rose by $1.06 trillion. Households had lost real-estate wealth for nine consecutive quarters before the second quarter’s gain.

Consumers continued to pay down debts or have their debts written off at a record pace. In the second quarter, household debt fell at a 1.7% annual rate to $13.7 trillion, matching the record percentage decline in the fourth quarter. Household debt has fallen four quarters in a row and is down 5% from the peak. Before this recession, household debt had never declined in any quarter dating back to 1952.

Stimulus payments boosted disposable incomes by 5.2% annualized to $10.9 trillion annually. It was the first increase since the stimulus payments in the second quarter of 2008. Over the past four quarters, disposable incomes fell 0.6%, the first year-over-year decline on record dating back to 1952.

Household debt dropped to 126% of disposable income from 128% in the first quarter and a record 131% in the first quarter of 2008. In 2000, it was 91%.

Household mortgage debt fell 1.4% annualized to $10.4 trillion, the fifth consecutive decline in mortgage debt. Consumer credit fell at a 6.1% annual rate to $2.5 trillion. It was the largest percentage decline in consumer debt since 1980. In a separate report, the Fed has said consumer credit declined even faster in July, dropping at a 10.4%.
Total debt in the economy grew at a 4.9% annual rate, boosted by massive debts taken on by the federal, state and local governments. Federal government debt rose at a 28.2% annual rate, the fourth straight increase of more than 20%. In the past year, federal debt rose by $1.9 trillion to $7.2 trillion. State and local borrowing rose at an 8.3% annual rate in the quarter to $2.3 trillion. Nonfinancial business debt fell at a 1.8% annual rate, despite a 1% increase in corporate debt. The net worth of nonfarm nonfinancial companies fell at a 175 annual rate, the seventh consecutive decline.

Debt of domestic financial firms fell at a 12.2% annual rate to $16.5 trillion, the largest percentage decline since 1961.

Paper losses paper gains.

If you want to believe the Feds feel good numbers that’s your choice.

Unemployment is very high.

Consumer spending is in the tank.

and the stock marker is way over valued.

Chart of the Day
Today’s chart illustrates how the recent plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio). Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the recent plunge in earnings and recent stock market rally, the PE ratio spiked and just peaked at 144 – a record high. Currently, with 97% of US corporations having reported for Q2 2009, the PE ratio now stands at a lofty 129.

So you only believe the Federal Government when it suits your intended purpose of civil unrest against the government when not controlled by a Republican Majority.?

How sad for you :slight_smile:

I’m sorry to rain on your parade but if you believe the government doesn’t manipulate you by how it reports the numbers you’re simply gullible.

And I never said the problem was limited to which party is in control.

Just like Clinton report the national debt decreasing in the out years was false so are the current prognostications.

Who ever is in charge tends to paint far to rosy a picture of the future.

We are in a world of hurt.

Ignore that at your own peril.