U.S. household wealth is close to the 2007 high

U.S. household wealth is close to the 2007 high. The Federal Reserve released data on Thursday showing that U.S. household net wealth increased significantly in the third quarter, and the current level is close to 2...

U.S. household wealth is close to the 2007 high. The Federal Reserve released data on Thursday showing that U.S. household net wealth increased significantly in the third quarter, and the current level is close to the peak in late 2007. This is also seen as a favorable sign that U.S. consumer spending will grow in the near future. The Federal Reserve reported Thursday that U.S. household net wealth increased by $1.72 trillion to $64.77 trillion in the third quarter of 2012, a gap of only about $1.2 trillion from the fourth quarter of 2007, before the latest severe recession. The most recent peak of U.S. household wealth was $67.3 trillion in the third quarter of 2007. The Fed noted that a rebound in home prices helped increase household wealth in the latest quarter: the value of real estate held by households increased by $300 billion in the quarter. The value of stocks held by households increased by about $520 billion during the same period. The growth in household wealth is expected to make consumers more confident in spending, and many economists believe that Americans are only willing to spend a few cents of every dollar of income after the crisis. The Federal Reserve's quarterly funds flow report released on Thursday also pointed out that the debt burden of the American people has also continued its four-year downward trend. Household debt fell 2% in the third quarter, the largest quarterly decline since the third quarter of 2011. Household debt in dollar terms fell by $65.5 billion to $12.87 trillion in the quarter, reversing three consecutive quarters of modest increases. In the past decade, the housing market bubble caused U.S. household debt levels to continue to grow in the first five years, with the proportion of household income peaking in 2007. After the housing market bubble began to burst in 2006, the United States experienced its worst recession since the Great Recession, and household debt levels began to decrease in 2008. In the third quarter of 2012, the total debt of U.S. households as a percentage of after-tax income fell to 112.7% from 113.4% in the previous quarter, the lowest level since 2003. But economists are divided on how far household debt reduction should go to have the best effect. Some scholars pointed out that continuing to reduce debt means less money for spending, which will be a drag on the overall economy. While total debt levels as a share of income remain near historic highs, another measure tracked by the Fed, monthly debt payments as a share of income, fell in the second quarter of 2012 to its lowest level since 1993.