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By Mark Felsenthal
WASHINGTON, Dec 11 (Reuters) - U.S. household net worth tumbled 4.7 percent in the third quarter, a record fourth consecutive quarterly decline, as real estate and financial assets lost value in the recession, a Federal Reserve report showed on Thursday.
Households also pulled back from borrowing in the period as household debt contracted 0.8 percent, the first drop since the Fed began compiling the data in 1952. Home mortgage borrowing fell 2.4 percent, the sharpest slide on record, according to the U.S. central bank's "Flow of Funds" quarterly report.
Declining net worth and receding credit point to households swinging sharply to saving and away from consumption, analysts said.
"There's going to be be a move back toward saving up to build financial resources," said Michael Feroli, an economist with JPMorgan Economics in New York.
The report adds to evidence that the economy, which went into a recession a year ago, turned down abruptly after the summer. U.S. GDP receded by 0.5 percent in the third quarter, the sharpest contraction in seven years. The jobless rate jumped to 6.7 percent in November.
Analysts polled by Reuters expect the fourth quarter to be even weaker than the third with a contraction of around 4.3 percent.
Household net worth slipped to $56.54 trillion in the third quarter from $59.35 trillion in the previous three-month period, the Fed report said.
Total U.S. non-financial debt rose at an annualized 7.2 percent in the quarter as federal debt soared by a record 39.2 percent.
"The lesson is that in the current environment of a deep economic recession and a severe financial market crisis, only the federal government still has ample access to credit," said Harm Bandholz, an economist for UniCredit Markets and Investment Banking in New York.
Business debt grew at a 2.9 percent annual rate, more slowly than in the second quarter, and the smallest gain since the fourth quarter of 2003. The slowdown was concentrated in net bond issuance and commercial mortgage borrowing, the Fed said.
Consumer credit growth slowed to a 1.2 percent annualized gain from 3.9 percent in the preceding quarter. (Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)