The value of financial assets, including stocks and pension fund holdings, held by American households increased by $2.52 trillion in the fourth quarter, according to today’s Fed report.

The Standard & Poor’s 500 Index climbed 9.9 percent from Sept. 30 to Dec. 31, capping the best yearly gain since 1997.

Home Prices

An improving housing market also boosted household wealth. The S&P/Case-Shiller national home-price index rose 11.3 percent in the fourth quarter from the same period in 2012, the biggest year-over-year advance since the first three months of 2006.

Household real-estate assets climbed by $401.1 billion, the data show. Owners’ equity as a share of total household real- estate holdings increased to 51.7 percent last quarter from 50.6 percent in the previous three months.

The Fed is trying to preserve improvements in household net worth by maintaining an accommodative stance, even as it scales back its unprecedented stimulus program.

Fed Chair Janet Yellen said the central bank intends to reduce asset purchases at a “measured” pace, in testimony before the Senate last week. She also said in response to a separate question that the bond-buying program is likely to end in the fall. At the same time, “if there’s a significant change in the outlook, certainly we would be open to reconsidering,” Yellen said.

Payroll Forecast

Fed policy makers will likely keep a close eye on the labor market, where gains have been inconsistent over the past three months. Payrolls grew by 113,000 in January following advances of 75,000 in December and 274,000 in November. They’re projected to increase by about 150,000 in February, according to the median estimate of economists surveyed by Bloomberg before tomorrow’s Labor Department report.

Household debt increased at a 0.4 percent annualized rate last quarter, today’s Fed report showed. Mortgage borrowing dropped at a 1 percent pace. Other forms of consumer credit, including auto and student loans, increased at a 5.4 percent pace.

For all of 2013, household debt climbed 0.9 percent, the biggest gain since 2007, even as Americans continued to pay down home loans. Mortgage borrowing fell 0.8 percent, the smallest drop since 2008, which marked the first year of the recession.

Total non-financial debt increased at a 5.4 percent annual pace last quarter, the most in a year. Federal government obligations jumped by 11.6 percent, the biggest gain since the first three months of 2012. Business borrowing rose 7.1 percent. State and local government debt dropped at a 4.9 percent pace.

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