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Recently released Federal Reserve figures show that household wealth fell by a record $5.1 trillion in the period October to December 2008, which was almost twice as much as the decrease in the previous quarter.
According to the Federal Reserve’s quarterly Flow of Funds report that was released March 12, 2009, the net worth of households and non-profit groups dropped to $51.5 trillion from $56.6 trillion in the third quarter of last year, making it the lowest level for four years.
Household net worth declined in five successive quarters causing a loss of $12.8 trillion during that period, and the decline is almost equal to the total size of the U.S. economy, which stood at $14.2 trillion in the last three months of 2008.
America’s total wealth declined by $11.2 trillion in 2008 from the previous year, which is the biggest annual decrease since the government began keeping its quarterly records in 1952.
Total borrowing by businesses, consumers, and government agencies climbed to an annual rate of 6.3 percent during final quarter, compared with an 8.1% rise during the prior quarter, and the gain was led by a 37% increase in borrowing by the federal government, and borrowing by state and local governments rose at a 1.2% rate.
The amount borrowed by businesses rose at an annual pace of 1.7% after having risen 4.1% during the previous quarter.