U.S. Household Net Worth Gains $2 Trillion

 |  Includes: DIA, IYR, SPY
by: Kurt Brouwer


Source: Bespoke Investment Group

I like this chart because it shows the growth in our net worth over a long period. Net worth grew along with the equity market and when stocks began to falter in 2000, net worth kept going because home prices boomed. When stocks fell again in 2008, real estate was also tumbling and net worth fell with it. This chart illustrates how closely tied we are to the world of investments.

This piece from MarketWatch spells out the turnaround after a steady string of declines for our collective net worth [emphasis added]:

Household net worth rises for first time in two years (MarketWatch, September 17, 2009, Rex Nutting)

American households were $2 trillion richer on June 30 than they were three months earlier, the first time in two years that household net worth has increased, the Federal Reserve reported Thursday in its quarterly flow of funds report.

Household wealth rose in the second quarter at a 17% annual rate, or $2 trillion, to $53.1 trillion after falling at a 13% rate in the first quarter, the Fed said. It was the first time since the second quarter of 2007 that wealth had increased. Net worth is down $12.2 trillion from the peak in 2007, an indication of how much the collapse in stock prices and home prices have hurt. Read the full report.

…The rally on Wall Street was the main reason for the increase in household wealth, but rising home prices contributed as well. Wealth in corporate equities rose by $1.04 trillion, while real estate wealth rose by $139 billion. Assets held in mutual funds, life insurance and pension funds rose by $1.06 trillion…

It has been a long, hard slog for investors in stocks and in real estate. No doubt there will be more trials ahead, but this is nice news.