You must have already heard that the stock market is performing well these days and home prices are increasing. Indeed, this is good for the economy and these two things have set a new record. The household worth in the country has just crossed $400 billion, which is a gain by 2%. Along with home prices, retirement savings, pensions and account balances have also increased and boosted the values further.
So what does this imply? Consumers have gained wealth and they are keen to spend this money. Yes, you guessed it right, this is very critical for economic growth. In fact, the industry experts believe that a greater household will pave for the country’s economy to accelerate at rapid rates this year. The term household worth actually refers to the total value of properties, accounts, stocks and other assets. However, this does not include any other debt like mortgage, credit card and so on.
In the year 2013, home prices in the entire country rose by huge values, which are the biggest recorded in the last eight years. The stock index also jumped by 32%. As far as this year is concerned, home gains have not been that high and the stock market has also increased by just 1.4%.
The rise in home values may be less compared to last year, but by no means, can it be regarded as insignificant. People now have more equity in their home and their mortgages are not troubled anymore. Some of them have already prevented foreclosures and others will also hopefully not experience it.
The equity, which all the homes in the country have, is around 52%, which is the highest value that has been recorded since the period before the recession. In the initial days of the financial crisis, equity was rated at 36.5%. If a comparison is made, the current values are significantly higher. During the recession period, America’s wealth valued at $55.56 trillion, whereas before that it was around $68.8 trillion.
Considering the current period, wealth has recovered, whereas for households, they have yet to benefit this much. The industry experts claim that the prime cause of this rebound is because of the gains in stock market. Nearly 80% stocks are owned by around 10% households.
The stats are positive for the economy and hopefully, the situation will remain this way.