The food-stamp economy
On the last day of every month, shoppers at Walmart load their carts with food and household items and wait for the midnight hour. Is this the new normal in America? Full Article
Household wealth dips for first time since 2002
WASHINGTON (Reuters) - The net wealth of U.S. households fell for the first time in five years during the fourth quarter last year as the value of real estate holdings and stocks weakened, the Federal Reserve said on Thursday.
The U.S. central bank's "flow of funds" quarterly report showed the net worth of American households dipped to $57.72 trillion in the final three months of 2007 from a revised $58.25 trillion in the third quarter.
The last time that quarterly net worth fell was in 2002, when it declined to $37.9 trillion in the third quarter from $39.6 trillion in the second quarter, the Fed said.
Total U.S. debt, excluding the financial sector, rose at an adjusted 7.7 percent annual rate in the fourth quarter, slowing from a revised 8.8 percent rate in the third quarter.
"In the fourth quarter, growth of home mortgage debt decreased to a rate of 5.5 percent -- the slowest quarterly pace since 1997 -- and consumer credit rose at an annual rate of 4 percent," the Fed said.
The decline in household net worth was evident both in home values and in widely held shares in mutual funds, pointing to significant sources of stress for consumers.
The value of real estate holdings fell to $22.48 trillion in the fourth quarter from $22.58 trillion in the third quarter while mutual fund shareholdings dipped to $5.08 trillion from $5.20 trillion in the third quarter.
The report also showed that the percentage of equity that Americans have in their homes sank to the lowest level since 1945. Homeowners' percentage of equity fell to 47.9 percent in the closing quarter last year from 48.9 percent in the third quarter and 49.6 percent in the second quarter.
The Fed said it was the first time since 1945 that the percentage of equity Americans hold in their homes has dropped below 50 percent, though it has been trending downward for some time.
That meant that the percentage of debt that people still owed on their homes represented more than half its value, possibly because of large mortgages on more costly homes. But it could also reflect the fact that in recent years many people drained equity out of their homes in the form of home-equity loans to keep up their spending.
(Reporting by Glenn Somerville; Editing by Chizu Nomiyama)
