ShareThis Page
Business Headlines

Net worth notched record high in 2014, Federal Reserve reports

| Friday, March 13, 2015, 12:01 a.m.

WASHINGTON — Fueled by higher stock and home values, Americans' net worth reached a record high in the final three months of 2014.

Household wealth rose 1.9 percent during the October-December quarter to nearly $83 trillion, the Federal Reserve said Thursday. Stock and mutual fund portfolios gained $742 billion, while the value of Americans' homes rose $356 billion.

The typical household did not benefit much, though. Most of the wealth remains concentrated among richer families. The wealthiest 10 percent of households own about 80 percent of stocks.

Still, greater wealth could help lift spending and economic growth. Higher stock and home values can make people feel more financially secure and more willing to spend, and consumer spending fuels about 70 percent of the economy.

The Fed's figures are not 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.

Corporations are noting sharp improvements in their finances, the Fed report showed. Businesses amassed $2 trillion in cash by the end of last year— a record high — up from less than $1.9 trillion three months earlier.

Cash-rich corporations could spend more on investments in machinery, computers and other equipment. That would make workers more productive and accelerate economic growth.

They could use some of their cash to raise pay at a time when many employees have been stuck with stagnant wages. Some economists have criticized publicly traded companies for spending heavily on repurchasing their own shares, which boosts profits and serves shareholders rather than employees.

Businesses are taking advantage of low interest rates by taking on more debt, which typically signals confidence in the economy and future growth. Business debt rose 7.2 percent in the fourth quarter, the sharpest quarterly increase in more than six years.

During the Great Recession, which officially ended in June 2009, Americans' net worth plummeted as stock and home values sank. Household wealth tumbled to $55 trillion in the first quarter of 2009 from a pre-recession peak of $67.9 trillion. Wealth did not surpass that peak until the third quarter of 2012.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me