According to the latest figures from the Federal Reserve, the net worth of U.S. households reached a new all-time high of $70.35 trillion as of the end of March 2013. On an inflation-adjusted basis, net worth is about 4% less than its prior peak in 2007, but the recovery has nevertheless been impressive. Since the value of households' real estate holdings fell by $2.7 trillion since 2007, the increase in net worth was driven by $6.2 trillion worth of increased savings, reduced debt, and financial market gains. This is all a testament to the dynamic nature of the U.S. economy, which in turn reflects the ability of businesses, workers, and consumers to overcome adversity and forge ahead.
In my experience, it never pays to underestimate the inherent dynamism of the U.S. economy. It only took four years to recover from the most devastating recession in modern times, and the near-collapse of the global financial system. The recovery has been painfully slow, but there is no reason to think it won't continue.
This is true. Real estate debt is much reduced. Will have a more difficult time protesting real estate tax appraisals this year. Also am glad to see the re-imposed the payroll tax. It's helping to reduce the deficit.
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ReplyDeleteI wonder where the new high in net worth is going, it is certainly not to the MC...
ReplyDeleteHans, from simply looking at the graph, it would appear that the major increase in Net Worth has gone to the owners of equities - the least loved of all asset classes.
ReplyDeleteFinancial assets have increased and equities have driven that increase. Equities protect against an investor's biggest risk -- loss of purchasing power. The problem is most people put their faith in housing. I think the younger generation will not make the same mistake.
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