US household wealth exceeds $89 trillion

US HOUSEHOLD

WASHINGTON: US household wealth rose at a solid pace in the April-June quarter, pushed by steady gains in home values and stock portfolios.
The Federal Reserve says net worth climbed 1.2 percent to $89.1 trillion, led by a $474 billion increase in housing wealth. Americans' stock and mutual portfolios climbed by $452 billion. Money in checking and saving accounts also rose slightly.
Americans are also taking on more debt, particularly mortgages, which suggests they are more confident in their economic futures and their ability to handle the debts. Mortgage debt rose 2.5 percent, the most since the recession.
Household wealth, or net worth, reflects the value of homes, stocks and other assets minus mortgages, credit card debt and other borrowing. The Fed's figures aren't adjusted for population growth or inflation.
Meanwhile, US consumer prices rose more than expected in August as healthcare costs recorded their biggest gain in 32-1/2 years, pointing to a steady build-up of inflation that could allow the Federal Reserve to raise interest rates this year.
The cost of living last month was also pushed up by sustained increases in rents. The uptick in inflation is likely to be welcomed by Fed officials when they gather next week to deliberate on monetary policy, though a rate hike is not expected at that meeting.
"The economy may not be firing on all cylinders, but growth is enough to spark a little more inflation than we thought. The Fed decision is going down to the wire," said Chris Rupkey," chief economist at MUFG Union Bank in New York.
The Labor Department said on Friday its Consumer Price Index increased 0.2 percent last month after being unchanged in July. In the 12 months through August, the CPI increased 1.1 percent after advancing 0.8 percent in the year through July.
The so-called core CPI, which strips out food and energy costs, rose 0.3 percent last month, the biggest increase since February, after gaining 0.1 percent in July.
Economists had forecast the CPI nudging up 0.1 percent last month and the core CPI gaining 0.2 percent. The core CPI increased 2.3 percent in the 12 months through August after rising 2.2 percent in the year through July.
A separate report on Friday, however, showed consumer sentiment was steady in early September, suggesting retail sales could rebound in the coming months.
The US central bank has a 2 percent inflation target and tracks an inflation measure that has been stuck at 1.6 percent since March. Fed Governor Lael Brainard said on Monday she wanted to see stronger consumer spending data and signs of rising inflation before hiking rates.