According to new data from U.S. Census Bureau, Americans are making more money! Veuer’s Natasha Abellard (@NatashaAbellard) has the story. Buzz60
WASHINGTON — A healthy gain in the stock market and steadily increasing home prices boosted Americans’ household wealth this spring, a trend that likely adds to the nation’s inequality.
The Federal Reserve said Thursday Americans’ net worth rose 1.8% to $96.2 trillion in the April-June quarter. Stock portfolios and mutual funds jumped $1.1 trillion. Home values climbed $600 billion.
The solid gain in wealth could make many Americans more confident and spend more, which typically fuels economic growth. Consumer spending accounts for about 70% of U.S. economic activity.
But the increases in wealth aren’t widely shared, which many economists worry limits its economic benefit. Wealthier Americans are less likely to spend additional income and wealth gains.
Roughly 10% of Americans own 80% of the nation’s stock market value. And the wealthiest 1% held 42% of the nation’s wealth in 2012, the latest data available, according to research by economists Emmanuel Saez and Gabriel Zucman of the University of California-Berkeley.
Meanwhile, housing is the main wealth accumulation vehicle for the middle class. Home prices have climbed sharply since 2012, but in much of the country, they still trail pre-recession levels.
Total household wealth includes checking and savings accounts and subtracts mortgages and other debt.
The Fed’s data comes after the Census Bureau reported last week that middle-class families enjoyed solid income gains in 2016 for the second straight year, after seven years of stagnating earnings.
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But the same report also showed income inequality is worsening.
The wealthiest 5% of U.S. households received 22.6% of all income last year, Census said. That’s up from 21.9% two years earlier. The middle one-fifth of households earned 14.25, down slightly from 14.3% in 2014. And the poorest fifth received just 3.1%, unchanged from two years earlier.
Still, there are signs that U.S. households’ finances are broadly improving.
Rising home prices have boosted Americans’ homeownership stakes to 58.4%, on average, the Fed report found. That’s the highest since the first quarter of 2006.
With more people gaining equity in their homes, fewer are “under water,” which occurs when a household owes more on its mortgage than the home is worth.
Just 5.4% of homeowners with mortgages were under water in the second quarter, real estate data provide CoreLogic said Thursday. That’s far below the 2009 figure of 26%, after home prices crashed and precipitated the financial crisis.
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