- Associated Press - Thursday, December 8, 2011

Americans’ wealth last summer suffered its biggest quarterly loss in more than two years as stocks, pension funds and home values all lost value.

At the same time, corporations raised their cash stockpiles to record levels.

Household net worth fell 4 percent to $57.4 trillion in the July-September quarter, according to a Federal Reserve report released Thursday. It was the sharpest drop since the tumultuous period after the September 2008 bankruptcy of investment bank Lehman Brothers, as well as the second straight quarterly fall.

Household wealth, or net worth, is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.

Stock market declines, in particular, have held back Americans’ quest to recover losses from the 2008 financial meltdown. The Standard & Poor’s 500 stock index tumbled about 14 percent in the July-September period, ending a streak of four quarterly increases. The decline was driven by worries about Europe’s debt crisis and the U.S. economy.

Stocks have rebounded about 9 percent since last quarter ended. But the S&P index is still about 21 percent below its peak of four years ago.

“Going forward, you’re going to see these ups and downs; the era of volatility is back,” said Gregory Daco, principal U.S. economist at IHS Global Insight. “There’s greater uncertainty among consumers.”

The value of Americans’ stock portfolios fell 5.2 percent last quarter. T. Rowe Price Associates estimates that two-thirds of that decline has been recouped in the October-December period. Much of that comes from continuing contributions to retirement accounts.

Home prices remain under pressure, diminishing home equity. Home equity is the biggest source of wealth for most Americans. Last quarter, home values slipped 0.6 percent. Total values fell to $16.1 trillion, down from nearly $21 trillion in 2007, before the recession began.

At the same time, corporations are amassing record cash stockpiles $2.1 trillion at the end of September. Their reluctance to spend more of that money helps explain why job growth remains modest. The unemployment rate fell to 8.6 percent in November. But it’s hovered near 9 percent for more than two years.

The average balance in 401(k) plans managed by Fidelity Investments, the largest workplace savings plan provider, dropped nearly 12 percent in the July-September period.