Swedish households lost more than 300 billion kronor ($42 billion) in the first quarter of 2008, according to the SEB bank’s Sparbarometer index, which has tracked the wealth and savings of Swedish households since 1996.
The index’s debt quotient, which measures the level of debt in relation to assets, is at the highest level ever recorded by the Sparbarometer.
“Falling stock prices and an increase in new loans has dug into households’ net worth. At the same time, housing prices haven’t kept up,” said SEB economist Gunilla Nyström to the TT news agency.
According to preliminary figures, housing prices fell 2.4 percent during the first quarter in 2008.
Swedes took 45 billion kronor out of their private savings in the first quarter, most of which went to consumption.
The second quarter’s withdrawals from investment funds amounted to 24 billion kronor, while 35 billion was placed in bank savings accounts.
“The trend from the last quarter in which households consumed their savings has now been broken,” said Nyström.
At that time, money was used to maintain people’s standard of living despite higher prices for food and fuel, as well as higher lending costs.
But now the threat of a slowing economy appears to have sunk in to Swedes’ consciousness, causing them to prepare for tougher economic times.
Taken in aggregate, however, household assets are nearly four times greater than debts.
“But there may not be many who feel that way. Many of the assets are placed in secured savings such as the corporate pension system and public pensions, in savings accounts which households can’t access,” said Nyström.
And despite the high debt quotient, 27 percent, household net worth looks good on average, according to Nyström, who suspects that the rate of indebtedness will decrease.
“A few years ago, indebtedness was increasing by more than 12 percent a year. Now that rate is down under 10 percent. But many households have poor liquidity,” she said.