Household wealth is up (but finances still fragile)
Household wealth is up (but finances still fragile)

Even though the value of real estate continues to fall, household wealth has been on an upward path as families rebuild finances tattered by the recession.

Household wealth rose by $2.1 trillion during the three months ending in March to $56.8 trillion. This is certainly an improvement after falling steeply during the depths of the economic recession, but households are still deleveraging and vulnerable to many headwinds on the horizon.

To be sure, households have slashed debt by $1.03 trillion, or 8.2%, since it peaked in September 2008. Delinquency rates have declined for the fifth consecutive quarter, with 10.5% of outstanding debt in some stage of delinquency -- down 11.9% from a year earlier, according to the Federal Reserve Bank of New York.

This is good news, but far too many American households' finances are still quite fragile as consumer spending remains weak. Nearly half of Americans polled by the National Bureau of Economic Research released in May say they couldn't come up with $2,000 in 30 days. The survey asked: "If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?" In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable.


Last updated May 31 2011: 11:33 AM ET

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