U.S. household wealth increased 2.2% during the third quarter as people cut debt and gained from rising stock prices, according to a report the Federal Reserve released Thursday.
Households' total net worth rose by $1.2 trillion to $54.9 trillion, according to the Fed, while households' outstanding nonfinancial debt fell at an annualized rate of 1.7%, marking the eighth straight quarterly decline.
The bulk of the increase came from rising stocks, which more than offset falling home prices. The Dow Jones Industrial Average and Nasdaq Composite advanced 10% and 12% during the quarter, respectively. In contrast, total real-estate holdings fell 2.1% from a year earlier to $18.3 trillion, according to the report.
Meanwhile, companies continued to boost their cash balances. All together, nonfinancial companies in the U.S. increased their cash total by 7.2% during the quarter to about $1.93 trillion, or about 7.4% of total assets, the Fed also said Thursday.