Big fall in US household wealth

The net worth of US households fell by a record amount in the final quarter of 2008, the Federal Reserve has said.

Households saw a 9% drop in wealth from the previous quarter - the largest since the Fed began collecting records more than 50 years ago.

Net worth is measured as total assets such as homes minus liabilities like mortgages and credit card debt.

Separate figures from the Commerce Department showed US retail sales dropped in February.

Sales fell by 0.1% last month compared to January. That was less than the 0.5% decline that had been forecast.

Record fall

The decline in net worth was the sixth consecutive quarterly drop.

The record fall pushed the total net worth of households down to $51.48 trillion (£37.3 trillion).

It has now fallen 20% below its peak of $64.36tn in the third quarter of 2007.

Since then house prices have tumbled and more than a million people have lost their homes.

Consumer spending

Retail sales in the US had gained 1% in January, but sales have now dropped in seven of the last eight months.

Shoppers are cutting back as the recession worsens

Retailers have seen fewer customers as the recession in the US has taken its toll.

But the data showed sales excluding cars fell by 0.7%, more than the expected drop of 0.1%.

Retail sales figures are significant as the US economy relies on consumer spending, which accounts for two-thirds of all economic activity.

Last month, some of the US's best-known retailers reported slumps in profits for the three months to the end of January.

Clothing retailer Target said profits were down by 41% as customers cut back on more expensive clothes and furniture, while more fell behind on store card payments.

Home Depot had a $54m (£37m) loss as it suffered from the housing market slump.

Department store chain Macy's said profits were almost 59% down owing to costs of closing regional offices and shops, and weak sales.