Net worth plunges at 18% annualized rate in third quarter, Fed data show
WASHINGTON (MarketWatch) -- Stung by the loss of more than $2.8 trillion in their net wealth, the nation's households paid down their debts in the third quarter for the first time since at least 1952, the Federal Reserve reported Thursday.
As of Sept. 30, households' total outstanding debt shrank at an annualized rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It's the first decline in household debt ever recorded in the report.
Households paid off more mortgage debt than they took on for the first time on record. Mortgage debt fell at a 2.4% annual rate to $10.54 trillion.
Other consumer debts, such as credit cards and auto loans, increased at a 1.2% annual rate in the quarter to $2.6 trillion.
Total U.S. domestic nonfinancial debt increased at a 7.2% annual rate, boosted by a postwar record 39.2% increase in debt taken on by the federal government.
Business debt increased at a 2.9% annual rate, the slowest in five years. Corporate debt rose at a 3.7% annual rate, a four-year low.
With the stock market plunging and home prices falling rapidly, American households lost a total of $2.81 trillion in wealth during the third quarter, the most ever. Wealth fell at an 18% annual rate during the quarter.
Assets of households dropped by $2.7 trillion, while liabilities increased by $128 billion.
Holdings in real estate fell by $647 billion. Direct holdings in corporate equities fell by $922 billion, while holdings in mutual funds fell by $423 billion. Life-insurance and pension reserves also declined, down by $653 billion.
