US household net worth falls for third straight quarter
Surging mortgage rates have hit demand.
US household net worth fell for a third-straight quarter as equities continued to retreat.
Household net worth decreased $392 billion in the July-September period, or 0.3%, after falling a record $6.3 trillion in the second quarter, a Federal Reserve report showed Friday.
The value of equity holdings dropped $1.9 trillion and the value of real estate held by households rose by about $820 billion.
Over the third quarter, the central bank signaled not only further interest-rate hikes but also the intention to leave them elevated for a while. The S&P 500 index slid sharply from mid-August through the end of the quarter.
Meantime, surging mortgage rates have severely restrained demand for homes — a key source of wealth for Americans. That said, home values have only just recently begun to decline.
The Fed’s report also showed household checkable deposits, or the money Americans have in checking, savings and money market accounts, continue to rise. Checkable deposits have swelled amid rising wages and a variety of pandemic-era support, helping explain why consumer spending is holding up despite rapid inflation.
Still, Americans have been leaning on credit cards and dipping into savings to keep spending.
Consumer credit not including mortgages rose at a 7% annual rate in the third quarter.
While still elevated, that marked a deceleration from the previous three months.
Business debt outstanding increased at a 5.3% pace. Federal debt also rose, though state and local government borrowing fell.
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