The wealth of U.S. households fell by the biggest amount in more than a half-century during the fourth quarter of 2008 as a deepening recession hurt confidence and finances, the Federal Reserve (Fed) reported Thursday. Household net worth fell by $5.1 trillion from the previous quarter to $51.5 trillion. For all of 2008, net worth declined by $11.2 trillion, reflecting steep drops in the housing and stock markets, the Fed said. The declines in household net worth were the biggest since quarterly and annual records began in 1951 and 1946, the central bank said. The fourth-quarter drop was the sixth consecutive quarterly decline in net worth as the recession causes unemployment to surge and the value of homes and investments to plummet. Since a second-quarter 2007 peak of $64.4 trillion, U.S. household wealth has fallen by about 20 percent, reducing consumer spending and adding to Americans' fears about the economy. After five consecutive years of sharp increases in home prices, the housing bubble burst in 2007, gravely damaging the financial system as banks were left with billions of dollars in losses on mortgages and mortgage-backed securities.
