Fed Says You’re Richer – We Beg to Differ

Fed Says You’re Richer – We Beg to DifferI’d like to be that at this mid-stage of 2012, you’re probably not feeling that much richer than you did in years gone by. Nevertheless, the Federal Reserve has released data which suggests that on the whole, you are in fact considerably better off this year.

According to the number-crunchers, the overall net worth of US households coast-to-coast increased by a total of $2.8 trillion during the first quarter of the year. This represents that single largest quarter of growth since the financial crisis took its first bite out of the US economy, translating on paper to an increase in net worth of around $9,000 per citizen.

Nevertheless, there’s still a sizeable gap of $4 trillion to bridge before we can get back to what we had before the financial crisis, so we’re not exactly out of the woods yet. All in all, the total net worth of US households is now estimated to be $63 trillion, which isn’t quite on par with the 2007 peak of $67 trillion.

On a slightly less positive note, assets may have seen a generous spike, but national debt has fallen pretty modestly by comparison. And if that wasn’t enough, the data has also done little to quell concerns over the very clear and present wealth divide in the US that’s already become a key political talking point.

Over the first three months of 2012, the single largest contributor to the spike in national net worth was the $931 billion that came courtesy of stock market assets. And while it isn’t only the super-rich and powerful that are playing the stocks game today, the overwhelming majority of stocks are still owned by the richest people in the country.

A sizeable $539 was added courtesy of mutual fund accounts, but in terms of the black-and-white standard savings accounts held by US citizens, the increase was a comparatively modest $96 billion.

As far as household debt goes, the slide really wasn’t anything to write home about which, according to national economists, indicates that most are still having trouble remedying the dizzying debt spiral that brought on the financial crisis in the first place. All in all, US citizens now owe a combined $13.4 trillion, representing a fall of $50 billion during the first quarter of 2012…something of a drop in the well.

Most of the $50 billion debt decrease came in the form of mortgages, but in terms of credit card debts we now actually owe a lofty $110 billion more than we did at the same time last year.

What’s also put the shivers up a few backs is the way in which the report shows that corporate cash stockpiles increased by $12.6 billion for the opening quarter of the year – now at $1.7 trillion collectively. The reason for the concern is the way in which economists have warned that increases in corporate cash on balance sheets can be taken as a sign of uncertainty for the future in the business world, with companies in large taking an interest in stockpiling rather than investing.

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