By Jeffry Bartash WASHINGTON (MarketWatch) - American households cut their overall debt in the first quarter and saw a $2.8 trillion increase in net wealth owing to stock-market gains - gains that have since evaporated. The Federal Reserve, in its quarterly "flow of funds" report, said Thursday that U.S. household debt fell by a seasonally adjusted 0.4% in the first quarter to mark the 15th straight decline. A 3% drop in mortgage debt more than offset a 5.8% rise in consumer credit. Net household worth, meanwhile, climbed by $2.8 trillion in the first quarter to $62.9 trillion, mainly because of a stock market rally earlier in the year. Almost all of those gains have been lost over the past month, however. The Fed also slashed the amount of cash companies have on hand after revising several years of data based on updated information from the IRS. U.S. nonfinancial corporations had a stockpile of $1.74 trillion in cash or liquid assets at the end of the first quarter, up slightly from $1.72 trillion in the fourth quarter. Prior to the revisions, the Fed's data had shown that companies had a record $2.23 trillion on hand at the end of the fourth quarter.

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