U.S. household wealth keeps soaring amid gaping inequality

Americans as a whole are much richer than before, but most of wealth gains have gone to the richest families, according to a recent report released by the Federal Reserve.

American households' combined wealth rose to a record high of 82.9 trillion U.S. dollars at the end of last year, driven by returns in equity and real estate investment, the Federal Reserve said Thursday in its financial accounts report.

The net worth of American households -- the difference between the value of assets and liabilities -- rose by 1.5 trillion U.S. dollars in the fourth quarter of last year, the largest gain in a year, the central bank said.

Record stock prices and slowly increasing home prices have made U.S. households wealthier as the economy continues to improve steadily. The value of stocks and mutual funds held by households increased 742 billion dollars in the fourth quarter, and the value of real estate rose by 356 billion dollars.

The rising household wealth also makes Americans more willing to borrow and spend. Household debt edged up at an annual rate of 2.7 percent in the fourth quarter, largely in line with the previous quarter. Home mortgage debt rose by 0.7 percent for two quarters in a row while consumer credit, including auto and student loans, grew by 6 percent.

However, most of the household wealth gains have gone to the richest families, as they hold more financial assets than most middle class families. The wealthiest 10 percent of U.S. households own about 91 percent of stocks and mutual funds, according to a research paper by Edward Wolf, an economist at New York University who studies the wealth distribution.

For middle class, they rely on their houses as their primary source of wealth. The housing bust, which led to the recent recession, hit middle-class homeowners particularly hard and many of them remain underwater, which means they own more mortgage debt than their home is worth.

The typical rich family in America now has nearly seven times the wealth of a middle-income family, the biggest gap in three decades, according to an analysis by Pew Research Center.

Critics say the Fed's controversial bond-buying programs, also known as quantitative easing, may have contributed to wealth inequality in the United States, as the stock market has recovered more strongly and quickly than the housing market. The Standard & Poor's 500 index jumped about 13 percent in the past year, while the house prices gained only about 5 percent. Endite