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Household Net Worth Fell in 2011

Source: WSJ

Posted on 08 Mar 2012

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U.S. households' net worth grew $1.2 trillion in the fourth quarter of 2011, but still declined around 0.75% over the year, for its first annual decrease since 2008.

Separately, the number of U.S. workers filing new applications for unemployment benefits rose for the third consecutive week, a reminder that the labor market's recovery remains uneven.

A Federal Reserve report released Thursday showed that households' total net worth increased to $58.5 trillion by the end of the fourth quarter of 2011, following two quarters of declines. Net worth represents total assets, such as homes and stock portfolios, minus liabilities, such as mortgages and credit-card debt. The stock market gained at the end of 2011, with the Dow Jones Industrial Average climbing almost 12% in the final quarter of the year.

The central bank's "Flow of Funds" report--an overview of U.S. household, business and government debt finances--also showed that in the fourth quarter, household debt rose at an annual rate of 0.25%--the first increase since the second quarter of 2008.

In a sign of tight budgeting, state and local debt declined almost 2% over 2011, its first annual decrease since 1996. Meanwhile, the federal government's debt rose at an annual rate of 13% in the fourth quarter, contributing to an increase in the annual debt of 11.5%, still its smallest annual increase since 2007.

Debt held by nonfinancial companies rose at an annual rate of 4.5% in the fourth-quarter. That pace was one percentage point higher than in the third quarter, according to the Fed. Total liquid assets of nonfinancial businesses continued to rise, climbing to $2.2 trillion in the fourth quarter as companies remained flush with cash.

Jobless Claims Increase

Initial jobless claims jumped 8,000 to a seasonally adjusted 362,000 in the week ending March 3, the Labor Department said Thursday.

Economists surveyed by Dow Jones Newswires had forecast that claims would rise by 2,000.

The prior week's figure was revised up to 354,000 from the initially reported 351,000.

The four-week moving average of claims, which smoothes out week-to-week volatility, inched up to 355,000, 250 more than the previous week.

Though up in recent weeks, new claims have been trending lower since last spring and have been mostly below 400,000 since November. When that happens, hiring usually picks up as well.

U.S. unemployment stood at 8.3% in January. Figures for February will be released Friday--economists are forecasting that the unemployment rate will hold steady as the economy adds 213,000 jobs. Still, unemployment is expected to remain high this year.

Thursday's report showed the number of continuing unemployment benefit claims--those drawn by workers for more than a week--increased by 10,000 to 3,416,000 in the week ended Feb. 25. Continuing claims are reported with a one-week lag.

The unemployment rate for workers with unemployment insurance for the week ending Feb. 25 held steady at 2.7%.

State-by-state data, also reported with a one-week lag, showed Massachusetts with the biggest rise in claims--up 3,475 due to school vacations and related layoffs for bus drivers food service workers.

Claims in California fell by 4,531 due to fewer layoffs in the manufacturing and service industries.