Household net worth fell sharply in the second quarter, ending a string of four

straight quarters of gains, according to a Federal Reserve report Friday.The

report shows a $1.5 trillion loss in combined household net worth in the period,
to $53.5 trillion. That represented a 2.8% drop in total wealth owned by
American consumers after all their debt is considered.
Most of the loss came from a $912 billion decline in the value of individual
stocks, a $650 billion drop in the value of retirement savings and a $295 billion
drop in mutual funds. The Standard & Poor's 500 index slid about 12% during
the quarter. But the index has rebounded about 9% since the end of the quarter.
"Despite this setback, we expect net worth to rebound further in the future as the
recovery in the labor market continues," said Theresa Chen, an economist with
Barclays Capital, in a note to clients Friday.
Real estate bucked the trend by growing by $46 billion, but that was only a
0.3% improvement. Of almost as great a help to household balance sheets was a
cutback in debt. Mortgage loans held by consumers declined $49.3 billion,
while outstanding consumer loans fell by $15.4 billion.Household net worth had
regained about $6.2 trillion in value during the previous four quarters, although
that was still well short of the $17 trillion loss from the middle of 2007 through
the start of 2009.