Household wealth rose by $1.1 trillion in the first quarter, reversing a sliver of the losses incurred during the deep recession, Federal Reserve data showed on Thursday.
Household net worth rose to $54.6 trillion, but was still well below the $64.4 trillion at the end of 2007, when the recession officially began, according to the central bank's quarterly flow of funds report.
Financial assets -- primarily stocks and mutual funds -- accounted for virtually all of the wealth increase, but the stock market has weakened in recent weeks, so those gains may be at least partially reversed in the second quarter.
The Standard & Poor's 500 index is down 8 percent since the end of the first quarter.
Americans pared debt at a 2.4 percent pace in the first quarter, the seventh consecutive quarter of declines in household borrowing. Mortgage debt dropped at a 3.8 percent rate, the biggest decline in records dating back to 1952.
Business debt excluding financial companies was little changed from the previous period, while financial sector debt contracted at an 8.6 percent rate.
Federal government debt expanded at an 18.5 percent clip, while state and local government debt grew at a 4.3 percent annual rate.
The financial crisis wiped out trillions of dollars in housing and financial market wealth and exposed heavy household and financial sector debt burdens.
Some of that debt has shifted from private to public hands as the government bailed out faltering banks and stepped up spending to combat the recession.
(Reporting by Emily Kaiser; Editing by Andrea Ricci)