NCPA - National Center for Policy Analysis

Stockholdings Bounded Ahead in 1999

March 14, 2000

The value of stock shares held by American households increased dramatically last year -- amounting to almost a third of household wealth. So reports the Federal Reserve in its latest quarterly "flow of funds" survey.

  • In the fourth quarter of 1999, Americans held $13.3 trillion in stocks -- including individual investment accounts, mutual funds and shares in employee-controlled retirement accounts -- up from $10.57 trillion a year earlier.
  • Stocks increased to a record share of household wealth -- accounting for 31.7 percent of net worth in 1999, up from 28.34 percent in 1998.
  • Household debt rose 9.4 percent in 1999 and business debt increased 10.6 percent -- both up a bit from the 1998 increase.
  • Margin debt -- that is, the borrowing of money to purchase stocks -- accounted for 1.61 percent of total stockholdings in 1999, the highest ratio since 1994.

The Federal Reserve worries that with Americans placing such a high proportion of their assets into stocks, a market downturn could suddenly dry up a huge chunk of consumer spending.

Source: Yochi J. Dreazen, "Stocks Are Almost a Third of Household Wealth," Wall Street Journal, March 14, 2000.


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