Released October 9, 2009

RALEIGH, N.C. -- We finally have some good news for household finances. The government said household wealth increased in the second quarter. Why is this important?

Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"This is very important. Household wealth represents the value of what you own - your assets - minus the value of what you owe - your liabilities. And during this recession, household wealth has gone down by $13 trillion - that's "T" - trillion dollars.

Now in the second quarter, we got some of that back. We gained $2 trillion, so we're now off by $11 trillion.

Now this is important for several reasons. One, of course, wealth represents the cumulative savings by households. Secondly, if wealth goes up, households will feel more confident to buy and spend money, so that's good for the economy of the future. And then thirdly, it does indicate that assets are going up faster than debt is going up. In fact, debt has been going down, and we have to have that happen for American households. They have to get their debt under control. So this is probably the best piece of economic news we've had in several months."

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http://www.ncsu.edu/project/calscommblogs/news/archives/2009/10/economic_perspe_465.html