Every quarter the Federal Reserve releases an update on the wealth situation for households. N.C. State University economist Mike Walden gives highlights from the latest report:
And … this is a really, really important report that comes out four times a year, and it updates us on the wealth of households. And I know people are obviously concerned about jobs and their income. But wealth is clearly important. You can make the argument this has been a wealth-driven recession.
Now with all that background, the new report has good points and bad points. Overall, it shows that in the third quarter, household wealth actually went down by about $200 billion from the second quarter. It was primarily due to a reduction in financial wealth — i.e., the stock market.
Real estate wealth actually went up, a very small amount, but it went up. And that’s … actually very good because real estate wealth has been trending downward tremendously. So to have it stabilize and go up a little bit, is … very, very important. Total household debt again was down. This continues the trend of households trying to pay down on debt, and very importantly mortgage debt is also down.
Consumer credit debt is up a little bit. So, consumers are starting to use their credit cards a little bit more, but that consumer credit debt is still well below pre-recessionary highs.
So the bottom line is that this report has mixed elements that does suggest that our wealth situation is still not back to where it needs to be.