WASHINGTON -- A rising stock market and climbing home prices drove Americans' net worth to a new high in the first three months of the year.
The Federal Reserve said Thursday that the value of Americans' stock holdings, real estate and other assets rose to $84.9 trillion from $83.3 trillion in the final three months of last year. Stock portfolios rose $487 billion, home values by $503 billion.
"Now that real estate assets are increasing as well, household net worth is broadening out," Dana Saporta, an economist at Credit Suisse Securities LLC in New York, said before the report. "The recovery in general is getting deeper and broader, and that's a good sign."
Still, households remained cautious about borrowing. Total household debt, which includes mortgages, credit cards, auto loans and other borrowing, rose 2.2 percent, the slowest pace since the end of 2013.
The Fed's figures aren't adjusted for population growth or inflation. Household wealth, or net worth, reflects the value of homes, stocks and other assets minus mortgages, credit cards and other debts.
Household net worth has steadily recovered after the recession wiped out nearly $13 trillion in wealth. Total net worth has since surpassed the pre-recession peak of almost $68 trillion.
Greater household wealth can lift spending and economic growth. When consumers feel richer, they are more likely to spend from their wealth, rather than just from income.
Still, the typical household isn't necessarily benefiting. The stock market's steady climb since it hit bottom in the spring of 2009 has been the primary driver of household wealth. Home prices have increased, but not by as much.
As a result, the rise in total U.S. net worth has primarily benefited wealthier families. Just 10 percent of the richest households own 80 percent of stocks, according to research by Edward Wolff, an economist at New York University. Housing wealth, which is more widely owned, hasn't recovered as much as the stock market.
The rise in household balance sheets may be starting to translate to stronger consumer spending. Retail purchases climbed 1.2 percent in May, according to a Commerce Department report Thursday. The gain was broad-based with 11 of 13 major categories showing increases.
Federal Reserve policymakers will be looking for signs that household purchases that make up the largest part of the economy don't take away from prospects for growth in the months ahead. The central bankers, who next meet next week in Washington, are weighing when to raise the benchmark interest rate for the first time since 2006.
Persistent job gains might help Americans feel wealthy enough to spend. Employers added 280,000 jobs in May, the most in five months, after a 221,000 April advance. An increase in the number of people entering the labor force caused the unemployment rate to inch up to 5.5 percent from 5.4 percent, which was the lowest since May 2008.
Information for this article was contributed by Christopher S. Rugaber of The Associated Press and Michelle Jamrisko of Bloomberg News.
Business on 06/12/2015