Fed: More Than 50% Of US Families Own Stock, Most Ever
Wednesday January 22, 6:27 pm ET
By Deborah Lagomarsino, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- More than 50% of U.S. households owned stock in 2001, the largest percentage ever, the Federal Reserve reported Wednesday.
Households' direct or indirect stock ownership climbed to 51.9% in 2001 from 48.9% in 1998, according to the Fed's Survey of Consumer Finances, a comprehensive study of families' financial condition conducted every three years.
Families' stock holdings increased in value in 2001 despite the stock market downturn that started in mid-2000, the study found. Households' stock holdings had a median value of $34,300 in 2001, up from $27,200 in 1998.
"The growth in the value of equity holdings helped push up financial assets as a share of total family assets despite a decline in the overall stock market that began in the second half of 2000," according to the study.
The study was based on interviews with 4,449 U.S. families from June to December 2001.
Financial assets of all types, from stocks and bonds to mutual funds and retirement accounts, accounted for 42% of total household assets in 2001, up from 40.7% in 1998, the study showed. Of those financial assets, 21.6% were in direct holdings of stock, down from 22.7% in 1998.
Upper-income households continue to hold the most stock, with 89.6% of households with incomes in the top 10% of earners owning stock in 2001. Of households in the bottom 20% of earners, just 12.4% owned stock, the survey showed.
Greater overall participation by households in the stock market contributed to a rise in families' net worth from 1998 to 2001, the study showed.
Median household net worth - which reflects the value of real estate, stocks, bonds and other assets minus outstanding debts - grew to $86,100 in 2001, up 10.4% from $78,000 in 1998, the survey showed.
Average or mean U.S. household net worth grew to $395,500 in 2001, up sharply from $307,400 in 1998.
"Although equity markets declined further after the survey was completed, a sensitivity analysis suggests that with equity prices as low as they were in October 2002, both median and mean family net worth still exceeded their levels in 1998," according to the study.
Median family incomes were on the rise in 2001, climbing to $39,900 in 2001, up 9.6% from $36,400 in 1998. Median income rose for all age groups from 1998 to 2001 except for those in the 45-54 age bracket, the survey showed. The 75-and- older age group had the biggest percentage gain in income during that time, seeing a rise of 23.1%.
The median income for nonwhite or Hispanic families was about unchanged from 1998 to 2001, while the median income for black families rose 20.3% to $25,500 in 2001 from 1998.
The value of nonfinancial assets as a share of families' total assets fell to 58% in 2001 from 59.3% in 1998, the study showed. Vehicles are still the most commonly held nonfinancial asset, followed closely by families' primary residence.
As for household debt, the percentage of families with any type of debt rose to 75.1% in 2001 from 74.1% in 1998. More than 75% of families' debt is mortgage debt.
However, debt as a percentage of families' total assets fell to 12.1% in 2001, its lowest level since 1989, the study showed. The proportion of debtors with payments exceeding 40% of their incomes also declined, falling to 11% in 2001 from 12.8% in 1998, the study showed.
"Debt payments relative to income showed broad signs of decline over demographic groups," according to the study.
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