WASHINGTON – The stock market’s sharp decline in August and September took its toll on Americans’ finances in the third quarter. Household net worth fell for the first time in four years.
The Federal Reserve says Americans’ stock and mutual fund portfolios plunged $2.3 trillion in the July-September quarter. That far outweighed a $482 billion increase in home values. Overall, household net worth fell to $85.2 trillion from $86.4 trillion in the second quarter.
Less household wealth can cause consumers to pull back on spending to rebuild savings. That can slow growth since consumer spending drives more than two-thirds of economic activity. Americans were cautious about spending in October when retail sales barely rose and savings rates climbed.