WASHINGTON — Strong stock market gains and higher home prices boosted Americans’ net worth in the April-June quarter to a record high, a trend that could encourage more spending.
U.S. households also took on the most new debt in five years, driven mostly by student and auto loans. More borrowing can be a sign of confidence, although greater student debt can pose a burden for younger households.
The Federal Reserve said Thursday that household wealth rose 1.7 percent in the second quarter to $81.5 trillion. Americans’ stock and mutual fund portfolios gained $1 trillion. The value of their homes increased $230 billion.
Greater wealth can make people feel more financially secure and encourage them to spend more. This “wealth effect” could boost the economy, although analysts note that it may not produce as much benefit as it did before the Great Recession.
That’s because most of the wealth gains of the past five years have occurred in the stock market, rather than in home values. Financial wealth is more volatile and doesn’t spark as much spending as housing wealth typically does, research shows.
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.
