Household wealth in the USA increased by US$2R in the Q-2 Y 2009, ending the biggest slump on record. Net worth for households and non-profit groups climbed to US$53.1T from US$51.1T in Q-1, marking the first gain since Q-3 Y 2007, according to the Federal Reserve’s Flow of Funds report yesterday in Washington, DC. The government began keeping quarterly records in 1952. The advance reflected the biggest quarterly jump in stock prices since 1998 and the first increase in home values in more than two years. Together with increased savings and less debt, the gain in wealth is part of the mending process consumers will undergo in coming years before spending can gain speed. Supplemented by federal stimulus measures such as the cash- for-clunkers program, tax credits and extended jobless benefits, consumer spending this quarter has started to improve following the biggest slump since 1980. The Report showed household net worth in corporate equities and mutual funds increased by US$1.36T in the Q-2. Real-estate-related household assets grew by US$139B, the first gain since the last quarter of 2006.
Facts: 1) The S&P 500 Index showing the largest quarterly gain since 1998 in Q-2, has continued to charge North since June 30, it closed down 0.3% at 1,065.49 yesterday in New York, retreating a bit for only second time in past 10 days. 2) Retail sales rose 2.7% in August, the most in 3 yrs, showing unexpected strength that extended beyond auto purchase, figures from the Commerce Department showed earlier this week. 3) The drop in net worth that ended last quarter began in the last three months of 2007, the longest stretch of decreases since recordk eeping began in 1952. Wealth dropped by a record US$13T during that time. 4) Owners’ equity as a share of their total real-estate holdings increased to 43.1% last quarter from 41.9% in the first three months of the year that was the lowest level on record. 5) Consumer debt fell at a 1.7% annual pace, the 4 consecutive decline. 6) Mortgage borrowing dropped at a 1.4% pace from April through June, while other forms of consumer credit fell at a 6.5% rate. 6) Total borrowing by consumers, businesses and government agencies increased at an annual rate of 4.9% last quarter, led by a 28% surge in federal government debt, even as household and business debt fell. 7) The US economy contracted at a 1% rate in the Q-2, matching the decline in consumer spending, after falling 6.4% in Q-1. 
Borrowing by the US federal government reflected spending linked to the stimulus plan. State and local government borrowing climbed at an 8.3% pace.
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