WASHINGTON (AP) — Americans are climbing further out of the opening they sank into in the course of the Great Recession.

A stock rally on the end of 2011 helped rebuild more in their lost wealth — a trend that carried into 2012. Households responded by borrowing more for the 1st time because the financial crisis began, at the same time their home values fell further.

Americans’ wealth rose 2.1 percent to $58.5 trillion within the October-December quarter, the sharpest gain in a year, the Federal Reserve reported Thursday. Still, it might need to rise yet another 13 percent to go back to its pre-recession peak.

Driving the gains were stock portfolios, which surged nearly 10 percent within the fourth quarter. And stocks have since risen further. Since early October, the ordinary & Poor’s 500 index has jumped 24 percent.

Neerja Pahwa is sensing a difference.

Pahwa, a flight attendant and fragrance consultant from St. Louis, still hasn’t recouped all of the investment losses she suffered throughout the recession. But she now feels comfortable enough about her finances to eat out and prevent by Starbucks more frequently. She recently made a down payment on a retirement home in Florida.

“Things are looking brighter and sunnier,” said Pahwa, 64, who hopes to retire next year — if the economy keeps improving. “i haven’t got an excessive amount of in my pocket. But i do know it’s coming. Things are just going to recuperate.”

Household wealth, or net worth, reflects the price of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards. It bottomed throughout the recession at $49 trillion within the first quarter of 2009. It’s still well below its pre-recession peak of $66 trillion.

The Fed’s quarterly report documents a number of the financial transactions that occur inside the United states of america.

Greater net worth tends to raise the economy. When people feel wealthier, they sometimes spend more. Businesses respond by stepping up plans to rent and expand.

Arash Shirazi of Washington, D.C., is spending again after cutting costs in the course of the recession. He says his portfolio has nearly recouped all its losses. Now he’s planning to fly to Paris on business and enthusiastic about expanding his music and ability agency.

“Things are becoming better,” said Shirazi, 37. “i am not taking place vacations or buying new cars. But I’m definitely beginning to spend a bit more.”

Corporations also are wealthier. They held a record $2.2 trillion in cash on the end of the year, up from $ 2.1 trillion on the end of September.

Still, few Americans are seeing any returns on their biggest investment — their home. Home values dropped 1.3 percent within the October-December quarter to roughly $16 trillion. The price of U.S. housing remains nearly 24 percent below where it was when the recession began in December 2007.

The housing market has shown incremental signs of improvement in recent months. It is able to benefit further if the job market keeps improving.

The economy has added 200,000 net jobs on average from November through January. The unemployment rate has dropped for 5 straight months to eight.3 percent. Economists estimate that greater than 200,000 jobs were added in February, too. The govt will release the February jobs report on Friday.

The improved economic outlook has emboldened some people to borrow more. Within the final three months of last year, household debt rose at an annual rate of 0.25 percent. It was the primary increase since mid-2008.

“Consumers were more willing to apply charge cards for shopping, signaling renewed confidence of their financial and job prospects,” said Paul Edelstein, director of monetary economics at IHS Global Insight.

That does not imply Americans are commencing to significantly load up their charge cards again, financial planners and economic analysts say. Mastercard debt remains well below its pre-recession level as measured by a separate report released by the Fed this week.

An Associated Press survey of economists last month found that they expect Americans to save lots of gradually less and borrow more, reversing a shift toward frugality that followed the financial crisis and begin of the comprehensive Recession.

Roughly half U.S. households own stocks or stock mutual funds. Stock portfolios make up about 15 percent of Americans’ wealth. That’s under housing but previous to bank deposits, consistent with the Fed’s report.

Most stock wealth is owned by the richest Americans, who also account for a disproportionate amount of consumer spending. Eighty percent of stocks belong to the richest 10 percent of usa citizens. And the richest 20 percent represent about 40 percent of consumer spending.

In three years, stocks have nearly doubled. Thanks largely to that surge, about 95 percent of folks with 401(k) retirement savings plans have extra money of their accounts than on the peak of the stock market in October 2007, in line with the worker Benefit Research Institute in Washington. That’s largely caused by workers’ continued contributions to their retirement accounts.

The average 401(k) balance in accounts at Fidelity Investments, the nation’s largest 401(k) administrator, rose 8 percent within the fourth quarter. And stock gains this year have likely increased those accounts further.

That does not imply everyone is feeling carefree about their financial situations.

“Most of the people are surprised their net worth has increased,” said Tom McGuigan, a licensed financial planner at Oklahoma City-based Burns Advisory Group. “And a few aren’t even sure it’s real yet.”

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Carpenter reported from Chicago.