Friday Sep 21, 201211:56 AM GMT
US household debt rises, largest jump since 2008
Fri Sep 21, 2012 11:53AM
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American households accumulated debt at the fastest rate in the second quarter in more than four years, and total domestic debt grew at the quickest rate in three-and-a-half years, suggesting many consumers are still struggling three years into an economic recovery, reports The Market Watch.

 

Household debt climbed $39.4 billion, the first gain in over a year, to $13 trillion in the second quarter, according to Federal Reserve data issued on Thursday -- just $2 trillion shy of the country's total yearly economic output.

 

Americans' financial net worth retreated by over $300 billion to $62.7 trillion.

 

In the short run, higher debt levels could boost growth. But unless wages and incomes keep up, analysts say any consumption spurt will likely prove short-lived.

 

U.S. non-financial firms held liquid assets amounting to $1.73 trillion, down about $20 billion from the prior quarter.

 

Households have struggled to rebuild their assets and income after the country's housing bubble popped and triggered the 2007-2009 recession.

 

The latest Census data showed median U.S. incomes fell 1.5 percent to $50,054 in 2011 after adjusting for inflation, the second consecutive annual drop.

FACTS & FIGURES

 

U.S. households saw incomes shrink for a second straight year in 2011, according to a Census Bureau report released Thursday, Sept 20. WSJ

 

The income of the typical U.S. family fell or was flat in almost every state last year, with the drop particularly steep in places where the economy has been hit hard by the housing bust. WSJ

 

The sharpest drop occurred in Nevada, where median income fell by 6%. The median fell by 3.8% in California and by 2.9% in Arizona and Florida. Those four states are among those that have seen the biggest falls in home values and housing construction since the financial crisis, and where Americans are still struggling with the resulting heavy debt and high unemployment. WSJ

 

Nationally, the median income dropped by 1.3% to $50,502 in 2011, with 46.2 million people in poverty, according to a Census Bureau report released Wednesday, Sept 12. MarketWatch

 

AHT/HJ

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