WASHINGTON (AP) -- The rebuilding of Americans' wealth is proceeding in steps rather than strides.
Households' net worth rose last quarter -- the fourth straight quarterly gain. Yet tumbling stock prices have reduced their wealth since then. Some economists say Americans' net worth may now be down slightly for the year. That helps explain why many say it will 2012 or 2013, at best, before Americans' wealth will return to its pre-recession levels.
Net worth -- the value of assets like homes, bank accounts and investments, minus debts like mortgages and credit cards -- rose 2.1 percent last quarter, the Federal Reserve said Thursday. It now amounts to $54.6 trillion.
In the midst of the recession, household net worth sank as low as $48.3 trillion. It's since risen 13 percent. Yet even counting last quarter's gain, net worth would have to rise 21 percent more to regain its pre-recession peak of $65.9 trillion.
Household wealth is vital to the economy because consumers tend to spend according to how wealthy they feel. And their spending accounts for about 70 percent of the economy.
During the recession, sinking home equity and stock prices made shoppers skittish. Should they become more nervous about their finances, the economic rebound could weaken or stall.
Over the past several quarters, the growth of net worth has been uneven. Last quarter's 2.1 percent increase exceeded the 0.9 percent increase in the fourth quarter of last year. But it fell well short of the 4.1 percent rise in the second quarter of 2009 and the 5.4 percent gain in the third quarter.
As Americans have gradually recovered some of their wealth, many of them -- especially the affluent -- have been spending more. But the housing and stock markets remain fragile. That's why most consumers aren't spending as freely as they typically do in the early phases of recoveries.
An example is Deena Bogan, 54, of Chicago, who hasn't seen her financial standing improve and is sticking to her frugal ways.
Unable to find a full-time job since leaving her position as a hotel concierge in 2008, she gets by by dipping into her 401(k) retirement account and relying on credit cards.
"I'm still struggling as much as ever," says Bogan, who works as a freelance writer and a temporary worker at trade shows. "The economy seems stagnant. I don't see any huge improvement."
Stock values rose 4.4 percent in the January-to-March period, to the highest point since the second quarter of 2008. But it was before they tumbled in recent weeks. As measured by the Dow Jones U.S. Total Stock Market Index, stock values lost $1.22 trillion in value between March 31 and the close of trading Wednesday.
The sharp decline in the past month and a half threatens the improvements in Americans' financial security over the past year.
The S&P 500 rose 4.9 percent in the first quarter. By April 23 the index had gained 9.2 percent for the year. It was on pace to exceed even last year's 23 percent surge.
But the S&P 500 has tumbled 11 percent since the high-water mark. That's more than wiped out all of 2010's gains: It's down 3 percent for the year -- and more than 30 percent from its 2007 peak. The result has been shrunken retirement savings accounts and anxiety about spending.
Americans' home equity isn't making up the difference, either. U.S. home values dipped 0.4 percent in the first quarter. That was after they had risen 0.2 percent in the final quarter of 2009. In the first quarter, home prices fell 3.2 percent compared with the fourth quarter, according to Standard & Poor's/Case-Shiller index.
Economists said it could take until at least the middle of the decade for home values to begin rising at a normal pattern again. Homes are the biggest asset for many Americans, and its fluctuations affect people's willingness to spend. Homes have appreciated an average 4 percent a year since World War II.
Given the weakness in both home and stock prices, Mark Vitner, economist at Wells Fargo, says Americans' net worth for the year may now be flat or down slightly.
During the first quarter, household debt dipped to $13.54 trillion, the Fed said. That translates into people on average carrying around $43,825 in debt -- mortgages, credit cards, auto loans and other consumer debt. Debt shrank at an annualized rate of 2.4 percent last quarter. It was the seventh straight quarterly decline.
People defaulting on mortgages and other loans accounted for some of the decline, economists said. But most of the reduction in debt involved households seeking to restore their financial health.
Take Grace Case, 38, an accountant from Fulton, N.Y. She said the economy's bumpy recovery has been a blessing because it's forced her family to shed debt. She and her husband, Dan, a machinist, are more disciplined in their spending.
At the same time, the brightening economic outlook and recovery of retirement savings have led them to loosen their wallets enough to remodel their home.
"Sometimes we fight and survive harder when we are faced with adversity," she said. "Every day we are digging out of debt, and it is liberating."
"Our long-term goal is to have zero debt, not waiting for the stock market to come back and save us."
Some analysts echo her caution. Gregory Daco, economist at IHS Global Insight, said the current second quarter might end the string of four straight quarterly increases in household wealth.
The European crisis has had "a large negative impact on stock market in the U.S. and thus households' financial assets," Daco said. "With employment recovering very gradually and housing prices remaining low, household wealth will make a very slow recovery."