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Wealth rebounds — but mostly for the wealthy

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America is rich again — if you add up all the money. But a familiar, unhappy tale is playing out as the nation recovers the household wealth lost from 2007 to 2012.

The total amount of household net worth hit a new record of $80.7 trillion at the end of 2013, according to the Federal Reserve. That’s certainly better than the grueling declines that occurred during the twin housing and stock-market busts. But a deeper look at the numbers shows that the kind of wealth held primarily by the affluent — financial assets — has soared beyond prior levels, while the most common middle-class asset — home equity — is still far below prior highs.

Here are the numbers:

Total amount of financial wealth now: $66.9 trillion. Pre-recession high: $54.3 trillion (third quarter of 2007). Change since then: 23% increase.

Total amount of real-estate wealth now: $22 trillion. Pre-recession high: $25 trillion (fourth quarter of 2006). Change since then: 11.9% decline.

The changes aren’t quite as stark if you adjust for inflation:

Total change in real financial assets from the pre-recession peak: 9.7% increase.

Total change in real real-estate assets: 7.8% decline.

Still, it’s clear the more securities and other financial assets you have, the more you’ve benefited from the asset reflation that has come at least in part from the Fed’s super-easy-money policies. When you factor in homeownership rates, the flow of wealth to upper-income Americans may be even greater. In 2006, when the amount of real-estate wealth peaked, the homeownership rate was 69%. It’s now about 65%. So a smaller amount of home equity is divvied up among considerably fewer people than it was in 2006. Since lower-income families account for most of those booted from the ranks of homeowners, the wealthy own proportionally more of the nation's residential real estate, and stand to benefit more as housing values recover.

The homeownership rate never should have gotten as high as it did, of course, since banks granted mortgages to many people who should not have qualified, which fueled the housing boom and triggered the bust that followed when stressed buyers defaulted.

Still, the flow of money the Fed has been trying to pump into the economy has dried up before trickling down to many middle-class families. Of course, it’s better to have the wealthy back on their feet, in Prada footwear, than to have nobody back on their feet at all. But the middle class still has much further to go before it reclaims its prior level of prosperity. America isn’t quite as rich as the headline number suggests.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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