Net Worth of U.S. Households Sets Record
Household net worth jumped nearly $3 trillion during last year’s fourth quarter to $80.7 trillion. Stock and mutual fund portfolios gained nearly $1.7 trillion, or 9 percent, according to a Thursday report by the Federal Reserve.
The value of Americans’ homes rose just over $400 billion, a 2 percent gain. And checking account balances, pensions plan assets and retirement savings, such as 401(k)s, also increased.
Strong wealth gains tend to trigger more consumer spending, a critical fuel for economic growth. Higher household net worth is one reason economists have forecast that the U.S. economy will accelerate later this year.
Household wealth, or net worth, reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts. Rising home prices are helping people rebuild ownership stakes in their homes. The equity that Americans as a whole have in their homes has reached 51.7 percent, the highest point since before the recession began. That’s up from a record low of 36.5 percent in the first three months of 2009.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -94 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to higher and more than wiped out the prior week’s +75BPS gain. The market saw the lowest rates on Monday and the highest rates on Friday.
The “flight to quality” into U.S. bonds primarily due to concern over the Ukraine helped MBS rally two weeks ago and last week MBS reversed course as the market’s concern over Ukraine cooled off. This was primary reason for the big sell off in MBS (which caused higher rates) on Tuesday. But we got another sell off on Friday which was due domestic economic data.
The market was prepared for a much weaker than expected reading in the Non-Farm Payrolls. The consensus estimates were for 139K with “whisper numbers” much lower than that. But the actual results surprised to the upside with a reading of 175K. Plus, the last two months were revised upward. This much better than expected labor data caused bond traders to accept that the Federal Reserve would continue on their predefined course of “tapering” or reducing the amount of monthly Treasury and mortgage backed security (MBS) purchases at each of their meetings. That caused mortgage rates to rise.
Date Time (ET) Economic Release Actual Market Expects Prior 11-Mar 10:00 AM Wholesale Inventories – 0.40% 0.30% 11-Mar 10:00 AM JOLTS – Job Openings – NA 3.990M 12-Mar 7:00 AM MBA Mortgage Index – NA 9.40% 12-Mar 10:30 AM Crude Inventories – NA 1.429M 12-Mar 2:00 PM Treasury Budget – NA -$203.5B 13-Mar 8:30 AM Initial Claims – 329K 323K 13-Mar 8:30 AM Continuing Claims – 2925K 2907K 13-Mar 8:30 AM Retail Sales – 0.20% -0.40% 13-Mar 8:30 AM Retail Sales ex-auto – 0.20% 0.00% 13-Mar 8:30 AM Export Prices ex-ag. – NA 0.20% 13-Mar 8:30 AM Import Prices ex-oil – NA 0.30% 13-Mar 10:00 AM Business Inventories – 0.30% 0.50% 13-Mar 10:30 AM Natural Gas Inventories – NA -152 bcf 14-Mar 8:30 AM PPI – 0.20% 0.20% 14-Mar 8:30 AM Core PPI – 0.10% 0.20% 14-Mar 9:55 AM Mich Sentiment – 82 81.6
I will be watching these reports closely for you and let you know if there are any big surprises:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.