Household wealth down first time in 55 years

Journal Record, The (Oklahoma City), Mar 14, 2001

WASHINGTON (AP) -- The net worth of U.S. households, hurt by a falling stock market, declined by 2 percent last year, the first annual setback in Americans' balance sheets in 55 years.

The Federal Reserve said Tuesday that Americans' total net worth was $41.42 trillion at the end of last year, a drop of $841.5 billion from their net worth at the end of 1999.

It marked the first time that Americans' net worth had declined from one year to the next since the Fed began tracking the figures in 1945.

The decline followed five straight years of strong increases in net worth as individual wealth was driven higher by the booming stock market. Household net worth rose by 12.6 percent in 1997, 10 percent in 1998 and 14.1 percent in 1999.

Private economists said Tuesday that the new Fed figures, contained in a report titled "Flow of Funds Accounts of the United States," went a long way to explain the economy's current weakness.

"The bursting of the stock market bubble has eroded household balance sheets and undermined the willingness and ability of Americans to spend as aggressively as they had been spending," said Mark Zandi, an economist at Economy.com, a West Chester, Pa., consulting firm.