Americans' wealth reached an all-time high this summer, buoyed by record-setting stock prices and a healthy recovery in home values.

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The Federal Reserve said Monday that U.S. net worth, a measure of household wealth, rose 2.6 percent to $77.3 trillion from July through September. Net worth reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts.

Rising stock prices boosted Americans' net worth $917 billion. Higher home values added another $428 billion.

The increase in net worth is an encouraging sign for the economy. As Americans gain wealth, they typically spend more and that drives faster growth.

The report also showed that Americans are willing to borrow more. That suggests many are growing more confident in their jobs and the broader economy.

Adjusted for inflation, net worth is still about 1 percent below its pre-recession peak. But both the stock market and home prices have continued to increase in the current October-December quarter. That's likely to push inflation-adjusted household wealth to a new record.

Still, the gains haven't been equally distributed. The wealthiest 10 percent of households own about 80 percent of stocks. And home ownership has declined since the recession, particularly among lower-income Americans.

Total mortgage debt rose 0.9 percent from the previous quarter. That's the first increase since early 2009. The rise reflects rising home sales and fewer mortgage defaults.

Americans are also holding more consumer debt outside of mortgages, in the form of student loans, auto loans and credit cards. Consumer debt rose 6 percent from the previous quarter.

But with job creation steady and wages rising gradually, Americans appear able to handle the additional borrowing.

Total after-tax income is rising faster than borrowing. That's pushed Americans' debts, as a percentage of income, to 99 percent. Before the recession, that ratio had peaked at about 125 percent.

Paul Edelstein, an economist at IHS Global Insight, says that improving household finances could make Americans more willing to spend.

But much of that could hinge on their willingness to borrow. If Americans remain hesitant to take on more debt, it could mean that the improvement in their finances won't necessary lead to big gains in spending.


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