Americans' Net Worth Shrinks $1.33 Trillion In 1Q

Yahoo! Finance:

WASHINGTON (AP) -- American households lost $1.33 trillion of their wealth in the first three months of the year as the recession took a bite out of stock portfolios and dragged down home prices.

The Federal Reserve reported Thursday that household net worth fell to $50.38 trillion in the January-March quarter, the lowest level since the third quarter of 2004. The first-quarter figure marked a decline of 2.6 percent, or $1.33 trillion, from the final quarter of 2008.

Net worth represents total assets such as homes and checking accounts, minus liabilities like mortgages and credit card debt.

The damage to wealth in the first quarter came from the sinking stock market. The value of Americans' stock holdings dropped 5.8 percent from the final quarter of last year.

Another hit came from falling house prices. The value of household real-estate holdings fell 2.4 percent. Collectively, homeowners had 41.4 percent equity in their homes in the first quarter. That was down from 42.9 percent in the fourth quarter.

The latest snapshot of Americans' balance sheets was contained in the Fed's quarterly report called the flow of funds.

Despite the drop, the speed at which net worth shrunk slowed to start the year. During the recession's deepest point in the October-December period, Americans' net worth fell 8.6 percent, according to revised figures.

With wealth declining and unemployment rising, there are questions about how consumers -- the lifeblood of the economy -- will behave in the coming months.

If they continue to spend, even at a subdued pace, the recession likely will end this year as predicted by Fed Chairman Ben Bernanke and other economists. However, if consumers hunker down and cut spending again, that could delay any recovery. In the final quarter of last year, Americans slashed spending at an annualized rate of 4.3 percent, the most in 28 years.

Still, there was some encouraging news on consumer spending Thursday.

Retail sales rose 0.5 percent in May, following two straight monthly declines, the Commerce Department reported. Meanwhile, the number of newly laid-off workers filing for unemployment benefits fell last week by 24,000 to 601,000, the lowest level since late January

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Comments

[munki]

Media manipulates our Market...

Media is responsible for much of poor writings...

Choose right words and headliners...

Stock market is one of major market that is assisting America's confidence to recover...

[RickyPoo]

And according to the wingnuts, it's all Barney Franks' fault.

Is this a joke of an opposition party or what?

[doubtingdavid]

And Pelosi's and Dodd's. Remember Freddie and Fannie, seems your enemy Bush tried to fix that probelmea few years ago and gang of three put a stop to it. Business as usual for Dumbocraps that hate this country so much.

[Jond0]

Yeah, Fannie and Freddie buying securities they were told were AAA but were really junk IS all their fault. Yeah, the victim is always at fault in your world, aren't they?

Oh, I forgot Dodd got a .2% discount on his mortgage -- it's ALL HIS fault!

[munki]

Choose a better headliner while Market it on and now... DOW is down 20+ points since this

[munki]

Anything else AP?

Media is the BIGGEST PROBLEM we have.

By using the historical data try to apply to today!!!!!!

Historical data is complied months ago... why talk like today?

OK... We may be poorer, but if our corporate prospect is better...

Why can't MEDIA add the positive components in their writing?

Is the reporter a Journalism major? or Econ major? with social working experience or just a writer?

Giver Americans... this is what happened, this is what going and this may be what to expect...

NEED A BETTER neutral and logistic writers....

[Vinkaye]

Two tv hosts have a spat and it garners 3,000 + comments... Americans facing financial 9/11 and 28 people are concerned.
Is it any wonder we can't get the government to do anything?

[jsgaetano]

Woohoo! It's the Bush Boom!

[knosiswar]

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." President, Thomas Jefferson

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance." James Madison

"The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest." Abraham Lincoln

"You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out... If people only understood the rank injustice of the money and banking system, there would be a revolution by morning." Andrew Jackson

[ROLtheWolf]

If all those great American leaders couldn't do anything, I don't know why you think we can.

[MIKEBC]

This is the end result of right wing conservative economics, supply side and tax cuts for the rich have failed!

[desertman]

A credit cycle collapse more or less always looks like this. It happens every 70-100 years or so. The cleanup will now begin but will occur again.

[econ1]

Actually worse than that if you include the increase in the taxpayer's share of government debt.

At some point people are going to have to stop spending and save or we will end up owned by China. Unfortunately the government isn't encouraging savings but we should do it anyway.

[Thordeer]

A wonderful blog post at chartingtheeconomy adjusts total household net worth for inflation, population growth, and deductions for national debt, and shows we've gotten about 20% poorer--from a per capita net worth of 170k down to 130k--in the last decade.

See http://chartingtheeconomy.com/?page_id=27

And I can only imagine how poorly this wealth is distributed: Middle classes have 0 financial assets; all their net worth is tied up in plummeting home prices (that they've been looting with home equity loans for years. I wouldn't be surprised if the median household net worth were close to zero.

[NotYouAgain]

Under the last six months of GW Bush, my IRA fell 50 percent. Under the first four months of BH Obama, it has risen 40 percent from the point it was at when Bush left office.

[drkazmd65]

You too NotYouAgain?

Probably just a coincidence,... but then again maybe not.

[tomasedison]

******** THANKS REPUBLISCVM !!

30 YEARS OF TRICKLE DOWN FAILURE

[tisfilm]

cause by your favorite boy, G.W. Bush.

[davidwayneosedach]

I know it's globalization but where is all this wealth going to? The Chinese?

[AudiGuy]

Yes, China and India. This country needs to make things we can sell to the world. How soon we forget, this is how we became the Economic Super Power of the World.

When I first went to China twenty years ago, I saw four private cars in two days. Last year I was picked up in a Mercedes and was stuck in a traffic jams for 40 minutes.

It is not to late people - WAKE UP!

[Thordeer]

Unfortunately, it *is* too late. Americans will not study, will not work hard, are resting on their laurels. We are in the decay phase of a once mighty nation, and 3 billion better educated and harder working Asians are going to eat our lunch now that they are transitioning to free markets. As long as they retain stable political systems and economies, we are toast.

It is inevitable.

Not everyone in this country will plummet economically. But we should get used to our standard of living falling as those in India and China rise.

Tell me: exactly what advantage does your typical American 20-year old have over the Chinese 20-year old?

[DocSyracuse]

Thought that the $1.3 trillion was referring to US taxpayers, who are now at least that much poorer due to Pelosi's wasteful and ineffective spending bill.

[patrickgarret]

Yah had nothing to do with 8 years, all in the last 4 months LOL You must not have stocks. I lost a ton at the end of '08 and Jan Feb '09... BUT March April and May has been a wonderful recovery for me and many Americans.

[comeback]

Wont stop here..have you seen Obama's budget..he must not own a calculator

[garymc8]

bush , who can only read at the fourth grade level, is responsible for the totlal moral breakdown of the gop.

[Lavafalls]

Nonsense. Reagan started the borrow and spend mantra.
Rove and ginge"
Nixon first said "if the president does it, it isn't illegal"

Lots of GOPers are to blame.

[Lavafalls]

Nonsense. Reagan started the borrow and spend mantra.
Ro.ve and ginge"
Nixon first said "if the president does it, it isn't illegal"

Lots of GOPers are to blame.