The net wealth of U.S. households fell 2.9 percent in the first quarter of 2008 as home values declined further and stock-market holdings fell sharply. It was the second consecutive quarterly drop, the Federal Reserve (Fed) said Thursday. The U.S. central bank's quarterly “flow of funds” report showed the net worth of U.S. households fell to $55.97 trillion in the first quarter from $57.67 trillion in the fourth quarter of 2007. Net wealth in the third quarter of last year was $58.20 trillion. The consecutive quarterly declines were the first since the second and third quarters of 2002, when recession-hit U.S. households saw their net worth fall 3.3 percent and 4.4 percent, respectively. According to the Fed, total U.S. debt excluding the financial sector rose at a 6.5 percent annual rate in the first quarter, compared to a 7.5 percent annual increase in the last quarter of 2007. The decline in household net worth was evident in both home values and in financial assets hit by market turmoil during a period that saw the collapse of Wall Street investment bank Bear Stearns. The value of real-estate holdings fell 1.3 percent to $22.07 trillion in the first quarter, while the value of stock holdings fell 10.2 percent to $4.90 trillion and mutual-fund shares fell 7.8 percent to $4.74 trillion, the Fed said.
