USA house (Photo : Reuters)
The United State's household wealth shot up 1.9 percent during the fourth quarter of 2014, to hit a record high of almost $83 trillion, the Federal Reserve reported on Thursday. Higher home values and rising stocks fueled the growth.
Portfolios for stocks and mutual funds rose an impressive $742 from October to December. Meanwhile, Americans' homes' values also increased a solid $356 billion.
However, there should be an asterisk beside the ginormous U.S. household wealth figure. The gross figure was mainly due to gains by the most affluent families in the U.S. In fact, the richest 10 percent of all households in the U.S. own approximately 80 percent of the country's stocks, according to India Times.
It is also noteworthy that the figures from the Fed have not been adjusted for inflation or population growth. Household wealth is calculated by subtracting debts such as credit cards and mortgages, from assets such as the value of stocks and houses.
Nonetheless, greater household wealth could help to encourage household spending and economic growth. Such effects would be critical as consumer spending accounts for almost three-fourths of the U.S. economy. Buying is big bucks.
U.S. corporations are also seeing improvements in their bottom lines. By the conclusion of last year, businesses held $2 trillion in cash money, which is also a record high. The figure was $1.9 trillion at the end of the third quarter of 2014.
Corporations might invest some of their extra cash in equipment such as computers and machinery, according to Newser. Another possible step would be to increase salaries during a time when employees' wages have remained sluggish.
The latest figures for U.S. households' net worth are a stark contrast from the Great Recession, which ended officially in June 2009. The gross household net worth plunged to $55 trillion during 2009's first quarter. What a difference six years make!
