Four times a year, the Federal Reserve updates us on what’s happening to our wealth. We just received the latest figures. Are we getting richer or poorer? N.C. State University economist Mike Walden responds.
“Well, in aggregate, we’re getting richer, and that’s good news. One of the big problems during the recession is that American households lost a ton of wealth, close to $18 trillion worth of wealth. Now, the good news is that we’ve recovered over the last three years, and this latest report says that we’ve actually continued that recovery.
“For example, in the last three months, the Federal Reserve shows that the value of assets — what people own — has increased by almost $1 trillion, whereas the value of debts — what we owe — has remained roughly the same.
“So the difference there — which is really wealth — has obviously gone up by about $1 trillion. And we’ve seen that in financial wealth — stocks, bonds, mutual funds — they’ve gone up. But we’ve also very importantly seen it in terms of housing or real-estate wealth, due to the fact that housing prices have gone up. That boosted housing wealth for homeowners.
“And on that note, what we now see is that for the average homeowner, the percentage that they actually own of their home — that is, not being owned by the bank, if you will, through a loan — is now at a six-year high. It’s at 50 percent. And this is, I think, contributing to better consumer confidence and better spending.”