Household wealth increases by $1.2 trillion

The household debt in America increased for the first time in three and a half years by the end of 2011. This implies that Americans are increasingly comfortable with borrowing money and this will lead to spending.

The data released by the Federal Reserve showed that household wealth is increasing by $1.2 trillion. Though the economy has not fully recovered, it on its way from the crisis that was gripping the country and put so many out of work. But the rising incomes have made the fourth quarter different. For the first time the household debt to after-tax income has fallen by 117.5 percent. It’s the lowest since 2004. The household debt to after-tax income was 118.2 percent in the previous quarter.

Consumer credit has been swelling in the last three months of the past year. In 2001, after the 9/11 attacks, credits rose significantly. Since that period this is the biggest gain. It has increased by 6.9 percent. Reports show that people have been borrowing primarily for college and cars.


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