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Economic Report: U.S. household net worth increases in sixth straight quarter, Fed data show

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The numbers: Total U.S. household net worth rose $2.4 trillion to $144.7 trillion in the third quarter, the Federal Reserve said in its Q3 flow of funds report, released on Thursday.

This is the sixth straight gain in net worth, which was boosted by government assistance during the pandemic. Household net worth stood at $116.8 trillion in the fourth quarter of 2019, prior to the onset of the coronavirus.

The value of real estate rose $1.4 trillion in the third quarter, while the value of corporate equities fell by $300 million.

What happened: On the liability side, household debt rose at a 6.2%  annual rate in the third quarter, down from a 7.8% rate in the prior quarter. Consumer credit rose at a 5.3% rate in the third quarter, while mortgage debt grew at a 7.8% rate.

Federal government debt fell at a 1.3% rate in the third quarter after jumping 9.6% in the prior quarter. Government debt soared 62.5% in the second quarter of 2020 as the government increased spending to battle the pandemic. 

Big picture: Economists are wondering how much money Americans salted away during the pandemic. The savings rate has fallen back to earth – just above 7% in the latest data through October –  after spiking above 30% during the pandemic. The U.S. economy is going to slow next year as government pandemic assistance fades away. Many economists are counting on Americans having enough savings to continue spending to pick up the slack.

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.29%

was clinging to small gains near 35,800 on Thursday. That is up sharply from its 52-week low of 29,755.

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