Household Net Worth Plunges By Record Amount

By MARTIN CRUTSINGER

WASHINGTON (AP) — The net worth of American households fell by the largest amount in more than a half-century of record keeping during the fourth quarter of last year, reflecting the blow families are taking from a plunging stock market and dwindling home prices.

The Federal Reserve said Thursday that household net worth dropped by a record 9 percent in 2008's October-December period compared to the third quarter. That was the biggest decline on records that go back to 1951.

The drop represented a loss of $5.1 trillion in family net worth, leaving the total at $51.48 trillion at the end of the year. Net worth represents total assets such as homes and checking accounts minus liabilities like mortgages and credit card debt.

The big blow to the family balance sheet in the fourth quarter came from the plunging stock market, which the Fed estimated slashed Americans' stock holdings by 23.2 percent.

While the Fed employs a slightly different methodology, that estimate was nearly identical to the 23.5 percent stock loss in the Wilshire 5000, which tracks the value of publicly traded common stocks. Since peaking in October 2007, the Wilshire 5000 has shed 53 percent of its value.