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US Household Net Worth Down 0.9% To $57.72 Tln In 4th Qtr

 
   By Jeff Bater 
   Of DOW JONES NEWSWIRES 
 

WASHINGTON (Dow Jones)--U.S. households' total net worth fell 0.9% to $57.72 trillion in the fourth quarter from $58.25 trillion in the third quarter, the Federal Reserve said Thursday.

The decline was the first since a drop recorded during the third quarter of 2002.

The Fed's quarterly "flow of funds" data also showed U.S. non-financial debt rose at a 7.7% annual rate October through December. The 7.7% rate was below the revised 8.8% rate in the third quarter, initially reported as an 8.9% growth rate. The Fed said the deceleration in the fourth quarter was concentrated in the household and federal government sectors.

Household net worth in the fourth quarter decreased to about 5.58 times disposable personal income, from a third-quarter level of about 5.69 times income. Household net worth is a measure of total assets, such as houses and pensions, minus total liabilities, such as mortgages and credit card debt.

U.S. household debt rose at a 5.6% annual rate in the third quarter, down from a 6.8% increase in the third quarter.

Growth of home mortgage debt rose at a 5.0% annual rate in the fourth quarter, down from a 6.2% pace in the third quarter.

Consumer credit climbed at 4.0% annual pace in the fourth quarter, down from a 6.9% growth rate in the third quarter and down from the 4.6% pace in the fourth quarter of 2006.

The federal government's debt rose at a 5.1% rate in the fourth quarter, compared with an 8.8% acceleration in the third quarter and a 2.8% pace of growth in the fourth quarter of 2006.

Nonfinancial business borrowing climbed at a 12.0% rate in the fourth quarter, the same as in the third quarter but up from the 11.3% pace in the fourth quarter of 2006.

"Stronger bond and commercial paper issuance offset weaker C&I and commercial mortgage lending," the Fed said. C&I refers to commercial and industrial.

The financing gap - the amount of money companies must raise externally to finance their capital expenditures - increased to $303.5 billion in the fourth quarter from $271.4 billion in the third quarter.

State and local government debt rose at a 7.6% pace in the fourth quarter. It was up from 6.5% in the previous three months but below 11.2% in the year-earlier quarter.

Outstanding borrowing of total nonfinancial debt stood at $31.21 trillion in the fourth quarter, up from $30.62 trillion in the third quarter.

-By Jeff Bater, Dow Jones Newswires; 202 862 9249; jeff.bater@dowjones.com

(END) Dow Jones Newswires

March 06, 2008 12:00 ET (17:00 GMT)


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