WASHINGTON (Reuters) - The net worth of U.S. households rose in the first quarter due to the rising value of homes and investments, a positive sign for the outlook for consumer spending.
The increase added $1.6 trillion to the total wealth of American families, putting it at a new record high of $84.9 trillion, a report by the Federal Reserve showed on Thursday.
While the economy and consumer spending was sluggish in much of the first quarter, the data suggests U.S. households are on a better financial footing and consumers may open their wallets more. Many economists believe that consumers spend a few cents out of every dollar that their net worth increases.
At the same time, Americans also showed signs of being more sheepish about borrowing money. Growth in household borrowing slowed to a 2.2 percent annual rate in the January-March period, the slowest pace since the fourth quarter of 2013.
The value of Americans’ homes increased by $411 billion, while the financial holdings of households and nonprofits rose by $1.1 trillion during the first quarter, boosted by higher holdings of stocks and mutual fund shares.
Reporting by Jason Lange; Editing by Paul Simao