U.S. Household Net Worth Posts Second Quarterly Drop
Housing-Market / US Housing Dec 09, 2011 - 02:45 AM GMTBy: Asha_Bangalore
Household net worth fell 4.1% in the third quarter (see Chart 2), after a 0.2% drop in the second quarter; year-to-date, net worth of households has dropped 2.5% to $57.35 trillion. Lower equity prices were the main reason the decline in net worth, while real estate made a positive contribution.
The important implication of the decline in household wealth is that consumer spending stands to be adversely affected. In addition to a decline in wealth, real disposable income has registered two quarters of declines (see Chart 3). In the absence of strong growth in employment, these developments should keep the FOMC focused on growth in their discussions at the December 13 FOMC meeting.
Asha Bangalore — Senior Vice President and Economist
http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.
Copyright © 2011 Asha Bangalore
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.
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