In keeping with a rising stock market and increasing home values, U.S. household net worth increased by $1.9 trillion to a record high of $77.3 trillion in the third quarter, according to the Federal Reserve.
But while housing values rose by $428 billion between July and September, and corporate equities and mutual funds owned by households grew by $917 billion, those gains don't necessarily translate into a source of ready cash for most Americans.
Wealth tied to a primary residence typically becomes available when homeowners tap into a home equity loan. Stocks are often held in tax-deferred retirement plans and are subject to penalty fees if withdrawn early.
The increase in personal net worth represents more of a beacon of hope for a slowly improving post-recession economic forecast. When consumers feel richer, even on paper, they generally spend more. This so-called "wealth effect" provides a boost to the economy.
For those who are not invested in the stock market or are unable to tap into home equity, the economic outlook is not as upbeat. They're likely feeling the effects of a widening income gap, tied to a sluggish recovery in employment.
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