WASHINGTON (Reuters) - Households increased their borrowing by the most since early 2008 in the second quarter while their worth declined, suggesting many consumers are still struggling three years into an economic recovery.
Household debt climbed $39.4 billion, the first gain in over a year, to $13 trillion in the second quarter, according to Federal Reserve data issued on Thursday — just $2 trillion shy of the country’s total yearly economic output.
Americans’ financial net worth retreated by over $300 billion to $62.7 trillion.
In the short run, higher debt levels could boost growth. But unless wages and incomes keep up, analysts say any consumption spurt will likely prove short-lived.
U.S. non-financial firms held liquid assets amounting to $1.73 trillion, down about $20 billion from the prior quarter.
Households have struggled to rebuild their assets and income after the country’s housing bubble popped and triggered the 2007-2009 recession.
The latest Census data showed median U.S. incomes fell 1.5 percent to $50,054 in 2011 after adjusting for inflation, the second consecutive annual drop.
Editing by Chizu Nomiyama