US household net worth posts biggest gain in a year

Shopping in New York.

WASHINGTON - Rising stock prices and home values pushed the net worth of US households higher in the fourth quarter, a reassuring sign for the outlook for consumer spending.

The increase added US$1.52 trillion to the total wealth of American families, putting it at $82.91 trillion, a report by the Federal Reserve showed on Thursday. The increase in net wealth was the largest since the fourth quarter of 2013.

While U.S. consumers have appeared somewhat shy in their spending habits in recent months, Thursday's data suggests their strengthening financial footing could help convince them to open their wallets more. Many economists believe that consumers spend a few cents out of every dollar that their net worth increases.

The increase came as households added to their debt levels at a 2.7 per cent annual pace in the October-December period.

Stocks held by households rose in value by $742 billion during the period, while the value of people's homes increased by $356 billion.