Household wealth in the U.S. climbed in the second quarter, a sign consumers will help growth in the world’s largest economy.
Net worth for households and non-profit groups increased by $694.8 billion from April through June, or 0.8 percent from the previous three months, to $85.7 trillion, the Federal Reserve said Friday from Washington in its financial accounts report, previously known as the flow of funds report.
Americans’ finances last quarter got a boost from rising property values and a strong job market that is sustaining their spending, which makes up about 70 percent of the economy. Low borrowing costs are also a help, with Fed policy makers deciding Thursday to keep interest rates near zero amid market turmoil, global risks and slow inflation at home.
Among other details of the Fed report, the value of financial assets owned by households, including stocks and pension-fund holdings, increased by $256 billion in the second quarter.
Household real-estate assets climbed by $499 billion. Owners’ equity as a share of total household real-estate holdings increased to 56.3 percent last quarter from 55.6 percent in the previous three months.
Gains in household wealth are giving Americans more confidence to borrow, the report showed. Household debt increased at a 3.9 percent annualized rate from April through June. Consumer credit, including auto and student loans, climbed at an 8.1 percent pace, while mortgage borrowing advanced at a 2.2 percent rate.
Total non-financial debt advanced at a 4.4 percent annualized pace last quarter. Business borrowing showed an 8.3 percent gain. State and local government debt increased at a 1 percent pace and obligations of federal agencies rose 2.4 percent.