"Has the American Dream Shattered?"

US household net worth fell 4 percent to $57.4 trillion in the July-September quarter, according to a Federal Reserve report released yesterday. It was the sharpest drop since the tumultuous period after the September 2008 bankruptcy of investment bank Lehman Brothers. Household wealth, or net worth, is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.

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 (US GDP is approx. 14 trillion) at the end of September. Their reluctance to spend more of that money helps explain why job growth remains modest. The unemployment rate hovered near 9 percent for more than two years.

Roughly half of U.S. households own stocks or stock mutual funds. Stock portfolios make up about 15 percent of Americans' wealth. That's less than housing but ahead of bank deposits, according to the Fed's report.

But most equity/stock wealth is owned by the richest Americans. Eighty percent of stocks belong to the richest 10 percent of Americans. And the richest 20 percent represent about 40 percent of consumer spending.

As measured by the Dow Jones U.S. Total Stock Market Index, stocks lost $2.6 trillion in the July-September quarter. About $15 trillion remains invested in U.S. stocks.

The Fed report says the average household owes about $121,000 on mortgages, credit cards, auto loans and other debt.