Household wealth hits record high

December 9, 2013
ECONOMY
Household wealth hits record high

Americans’ wealth reached an all-time high this summer, buoyed by record-setting stock prices and a healthy recovery in home values.

The Federal Reserve said Monday that U.S. net worth, a measure of household wealth, rose 2.6 percent to $77.3 trillion from July through September. Net worth reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts.

Rising stock prices boosted Americans’ net worth by $917 billion. Higher home values added $428 billion.

The increase in net worth is an encouraging sign for the economy. As Americans gain wealth, they typically spend more, and that drives faster growth.

The report also showed that Americans are willing to borrow more. That suggests that many are growing more confident in their jobs and the broader economy.

Adjusted for inflation, net worth is still about 1 percent below its pre-recession peak. But both the stock market and home prices have continued to increase in the October-December quarter. That’s likely to push inflation-adjusted household wealth to a new record.

Still, the gains haven’t been equally distributed. The wealthiest 10 percent of households own about 80 percent of stocks. And home ownership has declined since the recession, particularly among lower-income Americans.

— Associated Press

SOCIAL NETWORKING
Twitter shares soar on new ad products

Twitter rose the most since its initial public offering as new advertising products spurred optimism about the social-
networking company’s future sales growth.

Twitter shares gained 9.3 percent to close at $49.14 for the biggest jump since Nov. 7, the stock’s first day of trading, when it climbed 73 percent. With a market capitalization of $27.9 billion, the microblogging service is among the most expensive Internet companies.

The company has been adding features for advertisers to help it reach its more than 230 million users. Last week, Twitter expanded a tool that lets marketers target consumers who have expressed interest in their products based on Web-browsing histories. Such new offerings are helping to justify the stock’s price, said Brian Nowak, an analyst at Susquehanna Financial Group.

“We’re seeing that there’s a lot they can do with targeting and retargeting for advertisers,” Nowak said. “Over time it will help them grow into their valuation.” He has the equivalent of a hold rating on the stock.

Twitter, based in San Francisco, isn’t predicted to make a profit until 2016, based on the average estimate of analysts surveyed by Bloomberg. The stock trades at about 25 times projected revenue for 2014.

— Bloomberg News

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