3-24 Household worth up 5.4 percent, household debt down 1.7 percent, but … :: The Construction Management Pro

3-24 Household worth up 5.4 percent, household debt down 1.7 percent, but …


The Federal Reserve reports that Americans’ pocketbooks did well during 2009, unless they happened to be sitting in foreclosed homes.

In its quarterly “flow of funds” report, the Fed found the total net worth of U.S. households rose 5.4 percent in 2009. While some benefited from rebounding stock portfolios, much of the gain from an unprecedented drop in household debt.

The 1.7 percent decline was the first recorded by the central bank since it began tracking the data in 1945. The result was that household net worth – the difference between the value of assets and liabilities – rose $2.8 trillion, to $54.2 trillion by year’s end.

The nation’s overall debt rose by 3.4 percent in 2009, according to the Fed. At the end of 2009, household debt stood at $13.5 trillion, non-financial business debt was $11 trillion, and government debt was $10.2 trillion.

The government debtload reflected a 22.7 percent increase during the year, although it slowed in the fourth quarter.

Reflecting tight credit, non-financial business debt was down 1¾ percent during 2009, the first such drop since the early 1990s, according to the report. All credit instruments except corporate bonds were down.

On closer inspection, even the decline in household debt was not necessarily good news. Much of it was attributable to defaults on mortgages and credit card debt, two areas where the federal bailout of banks did little for their hard-pressed customers.

The defaults removed the associated debt from the running total of liabilities, making net worth rise on paper even when the real-world result was families losing their homes. Reflecting the tight market for consumer loans, overall consumer credit sank 5¾ percent below the 2008 level.

See the report here.

Joe Tyrrell may be reached at


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