The Federal Reserve reported that American wealth has recovered to pre-recession levels. As a matter of fact, on an adjusted basis, it is the best it has been since the 1940s. It remains an open question whether this “wealth” will continue to drive the stock market higher and show up, eventually, in an impressive improvement in a GDP growth rate, which has been muted over the past several quarters.

In its Financial Accounts of the United States report for the first quarter, the Fed’s analysts remarked:

Household net worth-the difference between the values of households’ assets and liabilities — was $ 70.3 trillion at the end of the first quarter of this year , about $ 3 trillion more than at the end of 2012. In the first quarter, the value of corporate equities and mutual funds owned by households expanded $ 1.5 trillion and the value of residential real estate owned by households increased about $ 784 billion.

One way to look at the improvement is that household net worth in 2007, before the recession, was $60.8 trillion. That dropped to $54.3 trillion in 2008. In the first quarter, the number was $70.3 trillion.

Economist are left to ponder whether the recovery, obviously driven by a improvement in housing and the extraordinary move of the stock market, continued into the second quarter and will maintain its pace of the remainder of the year. Second quarter data will not be available until around Labor Day.

At an early glance, the stock market continued its rise from the end of March until the start of June. Most data show that housing has continued to recover. Each trend would argue for an ongoing rise in net worth. However, unemployment has not gotten much better. Neither have wages. So, a future recovery of net worth, if undermined by these drawbacks, could be stopped and home prices would flatten. In addition, if the market moves into a correction phase like the one that has begun in Japan, net worth could erode again.

Home prices likely have been effected already by interest rates that are higher. It is too early to tell whether wages, after taxes, have been harmed enough by new taxes to make Americans more frugal. So far, there is little sign that people have drawn back from spending because of taxes, at least based on the sales of expensive products like cars.

If the “national net worth” improves again in the second quarter, the recovery will have accelerated enough that GDP growth should be much better than the 2% rate or so as the year comes to a close.

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