American Household Wealth Declines In Third Quarter Review
According to a report released Thursday by the Federal Reserve, household net worth fell 4 percent in the July to September quarter, the sharpest decline since 2009. Household net worth is the value of assets minus debt. The quandary is to understand what defines debt. While lenders, credit agencies, credit bureaus, virtually all marketing entities searching for individual financial culpability, view creditable income as all assets not established as immediate and necessary for the health of self and all eligible dependent contingencies relying on such assets, personal responsibility in understanding household finances creates stability regardless of fluctuations in the greater economy.
In an economy where businesses depend on attracting spenders without the means or without expendable income necessary to support purchases which are not within such household's plan or budget, some attrition may be directly attributable to ill-fated business. Lower net worth can mean that individual or household financial health and wherewithal was not understood by those attempting to live within the scope of the value of personal assets, but instead fell prey to over-prescribed marketing and over-used credit. Lower net worth hurts the economy, but might be a positive influence on creating greater stability in individual and household financial health.
Economic growth slows when people feel poorer since people require economic health in order to be solvent. People might feel poorer when net worth declines. When people feel poorer, they usually have good reason to feel that way, and probably should not purchase anything outside of their usual monthly expenses until the proper budgeted adjustments have been made.
Bank accounts are liquid assets should the accounts currently and adequately feed all necessary expenditures for all living things it supports, first. Any prescribed and determined excess would then be either expendable cash for purchases or services outside the household monthly norm, or it is put toward prosperous investment potential. Mortgages for family homes, while thought of as debt, are not debt but expense; the expense in lieu of rent, and are a necessary budgeted item. Drawing money out of the portion of this expense which is fair asset might increase monthly, annual, and future expenses, and would need to be accounted for within the personal knowledge of monthly, annual, and future budget requirements, as well as future investment potential. Relying solely on a lender's advice to understand household need and value within individual budgeted priorities might hurt the economy.Continued on the next page