U.S. household wealth fell 3.5 percent at year’s end amid stock rout

WASHINGTON (Reuters) – U.S. household wealth fell 3.5 percent at the end of 2018 amid a stock market rout and global volatility that threatened to weaken a near-decade old recovery, the Federal Reserve reported on Thursday.

In its quarterly Flow of Funds report the Fed said household net worth fell from around $108 trillion to $104.3 trillion over the final months of the year, a drop that included a roughly 14 percent, or $3.8 trillion, fall in the value of stocks and mutual funds.

About $300 billion disappeared from the cash and liquid holdings of nonfinancial corporations amid the equity rout and tightening credit conditions.

The volatility that reared up towards the end of 2018 figured prominently in the Fed’s recent decision to put further rate hikes on hold as policymakers assessed whether the drop in wealth would translate into less spending and slower economic growth.

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