Are you better off than you were 3 months ago? Fed says yes

Two consecutive quarters of growth offer a bit of hope in seeing that 21% gap filled, but analysts don't see it in the near-term. In fact, the likelihood of another strong quarter isn't good. According to Scott Hoyt, senior director of consumer economics at Economy.com, we won't hit the break-even point until around 2012. He said to the Associated Press, "We're clearly moving in the right direction, although we have questions about whether we can get there as quickly as we have in the past couple of quarters."

A 15% gain in the S&P 500 index caused the value of corporate securities to swell by $1.04 trillion, which was largely responsible for the third net worth gain. Like the consumer's balance sheet, though, equity markets still have some ground to make up. The S&P 500 is off 32% from its October 2007 peak, even with a 4% gain so far in the fourth quarter.

Two major threats to Americans' net worth remain. A decline in equity markets or a dip in the real estate market could put the squeeze on the consumer. Real estate increases of 2% contributed $348 billion to the up-tick last quarter, but economist Michelle Meyer of Barclay's Capital (BCS) believes the winter season and popularity of low-priced properties could push prices down 8%, and other analysts are forecasting 5% to 10%. This could be exacerbated by a drop in equity markets, with some saying prices are inflated by cheap lending and a weak dollar.

Also, always looming in the background is the repayment of consumer debt. Still stinging from the effects of the financial crisis, the Federal Reserve says that Americans are paying down their debt at record levels, with mortgages, credit cards and other loans down 2.6% last quarter.