US Household Net Worth Declines In Third Quarter

Date: December 11, 2015

Federal Reserve Data Shows US Household Net Worth Down $1.2 Trillion Due To Equities Losses

The latest Federal Reserve data showed that during Q3 2015 US household net worth declined by $1.2 trillion from $86.4 trillion to $85.2 trillion. Declines were led by $2.3 trillion in losses from households’ equities holdings, while households’ home values rose $482 billion. Still, US aggregate wealth was near its record high, set in Q2. Both Q2 and Q3 net worth are much higher than before the recession. In 2007, households had a total net worth of $66.5 trillion, according to the Wall Street Journal. Bloomberg News reported “equity values plunged in the third quarter as concerns mounted about the global economy,” adding that “household debt rose at a 1.5 percent annualized rate in the third quarter, the slowest pace in almost two years,” while “Growth in consumer credit, including auto and student loans, climbed at a 7.2 percent pace from 8.5 percent in the second quarter.” Mortgage credit slowed to 1.6 percent from 2.4 percent. The value of financial assets, including holdings in pension funds and stocks, “decreased by $1.7 trillion last quarter.”

What This Means For Small Businesses

News of a decline in US household net worth could signal an overall weakening of the US economy. However, net worth has still grown considerably following the recession, an indication that US consumers are building wealth that may eventually translate to spending at small businesses. Still, in the NFIB’s latest Small Business Economic Trends survey, NFIB chief economist William Dunkelberg said of current economic conditions, “GDP growth languished in Q3, and will not likely impress in Q4. The industrial sector is weakening and the small business sector has not returned to its historical role in the production of GDP and jobs. The October NFIB survey gave no indication of a resurgence in growth in the small business sector, readings remaining below average.”

Additional Reading

Reuters also covered the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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