US Household Wealth Reaches Record $83 Trillion

In the final three months of 2014, Americans' net worth, fueled by higher stock and home values, has reached a record high.

On Thursday, the Federal Reserve said that household wealth has shown a 1.9% rise during the October-December quarter and has reached to nearly $83 trillion.

Stock and mutual fund portfolios have gained $742 billion, whereas the value of Americans' real estate assets increased by $356 billion.

The typical household didn't gain much, as most of the wealth remained concentrated among richer families. About 80% of the stocks are owned by the wealthiest 10% of US households. This greater wealth could still help improve spending and economic growth.

People will feel more financially secure and will be willing to spend more, due to higher stock and home values. Consumer spending fuels about 70% of the economy.

The adjustment in Fed's figures is not done for population growth or inflation. The Fed report has showed that US corporations are also seeing sharp improvements in their finances.

Household wealth, or net worth, reflects the value of homes, stocks and other assets minus mortgages, credit cards and other debts.

By the end of last year, businesses amassed $2 trillion in cash, a record high, up from less than $1.9 trillion three months earlier.

Cash-rich corporations could spend more on investments in machinery, computers and other equipment, which would further make workers more productive and accelerate economic growth.

These corporations could also use a part of their cash to hike pay at a time when a lot of employees have been stuck with stagnant wages.

Some economists have criticized the publicly traded companies for spending huge amount on repurchasing their own shares, which increases their profits and serves shareholders and not the employees.

Businesses have also taken advantage of low interest rates by taking on more debt, which typically signals confidence in the economy and future growth. In the fourth quarter, business debt has raised by 7.2%, which is the sharpest quarterly increase in more than six years.