The net worth of the US household sector rose 8.8% last quarter versus 4Q03 to a record $48.5 trillion. The gain failed, however, to lift net worth to a new high versus income. In fact the increase lagged the 12.5% rise in net worth during 2003 and the ratio versus disposable income rose only slightly y/y to 5.5 times versus a peak of 6.2 times in 1999.

Household sector asset values rose 9.4% y/y as the value of real estate holdings jumped 12.9%. Financial asset values rose 7.8%, half the gain in 2003 and held back by higher interest rates which reduced the growth in treasury issues to 0.6%. Money market share values fell 9.3% but foreign deposits, checkable deposits and time & savings deposits all soared. Higher prices in the stock market helped lift the value of mutual fund shares by 18.7% and the value of corporate equities held directly rose 2.3%.

Foreign sector holdings of total US assets rose 20.7% y/y raising the foreign sector's ownership share of total US financial assets to a record 12.7% versus 7.0% ten years ago.

Growth in total credit market debt outstanding was steady at 8.2% y/y. The federal government and US households continued growing debt at or about a double digit rate and non-financial corporations' debt grew a lesser 4.8% y/y though it sped up in 4Q.

Individuals' total liabilities rose 10.7% last year, the fastest since 2000, as mortgage debt grew 13.6% and consumer credit rose 4.9%.