Thursday, March 6, 2014

Americans are richer than ever before

This has been the weakest recovery ever, but it nevertheless has managed to make the U.S. richer than ever before on a nominal, real and per capita basis. 


Data released today by the Federal Reserve show that the net worth of U.S. households increased by a staggering $9.8 trillion last year, or by almost 14%. Household net worth is now almost $12 trillion higher than it was before the Great Recession hit. The gains in recent years have come from increased holdings of financial assets (mainly equities, bonds, and savings deposits, which have grown by a total of $21 trillion from their 2009 lows), rising real estate values (up $3.9 trillion in just the past two years), and less debt (down $800 billion from pre-recession highs).


Even after taking into consideration inflation, household net worth has reached a new post-recession high of $80.7 trillion. As the chart above shows, this is very much in line with its 3.7% per year long-term trend growth.


Even after taking into consideration inflation as well as the growth of the population, per capita net worth has reached a new post-recession high of almost $255,000. This figure has been growing by about 2.4% per year for over 60 years. The growth of real per capita net worth hasn't been as smooth in the past several decades as it was in the go-go 50s and 60s, but it has kept up with long-term trends.

Yes, things could be better, but they aren't nearly as bad as you might have been led to believe. The U.S. economy is making a comeback that is fairly impressive.

8 comments:

Pacioli said...

Or, less euphemistically:

http://goo.gl/OyO0Us

Scott Grannis said...

The modus operandi of Zero Hedge is to spin positive data in the most negative way possible.

William McKibbin said...

Is there any skew in the distribution of this new wealth...? Does anyone on this blog care if there is a skew...? Put three people in a room -- one is Bill Gates, the other two are homeless -- can one reasonably claim that the three are wealthy on average...? Help me out folks...

William McKibbin said...

For the record, I will admit that my own net worth is higher than ever -- but, that's just me -- in the meantime, I am terrified of civil unrest here in the USA, or even around my town -- I keep guns nearby just in case...

Scott Grannis said...

The distribution of the staggering amount of wealth in the U.S. economy is of little importance. The vast majority of that wealth is always at the disposition of everyone who lives here. The vast majority of the wealth derives from the businesses, infrastructure, machines, structures, and activities that benefit everyone.

Suppose all of the buildings in Manhattan were owned by foreigners. Or suppose they were all owned by Bill Gates. Would that make any difference to the daily lives of New Yorkers, or to anyone else living in the country? No.

Benjamin said...

The per capita net worth figure is astounding---the average family of four has a net worth of $1 million?

Amazing?

I'll say it again: The private sector does more for less continuously, and the public sector (including the military) does less for more continuously...we are reaping the benefits of an economy that is most private-based.....

Cur deferral spending (especially agency spending) to the bone, and then keep cutting....

Roy said...

"The distribution of the staggering amount of wealth in the U.S. economy is of little importance."

Because a lot of the wealth is in the hands of the few it means higher saving rates (= lower consumption rate).

It has a clear impact on the economy in the long run and for the worse.

Roy said...

"Suppose all of the buildings in Manhattan were owned by foreigners. Or suppose they were all owned by Bill Gates. Would that make any difference to the daily lives of New Yorkers, or to anyone else living in the country?"

Interesting question, I'm looking forward to your followup post in answering it :) (seriously)

I'll put in my 0.002 cents:

1. Bill gates. Because bill gates has far more money than he needs to consume a vast portion of his wealth is than saved. If instead if was spread through many low or middle class families they would have consumed more of it on the aggregate which would have benefited consumption led economy in a developed country like the USA.

2. Foreigners.
A: how is the canadian market in some cities doing with all the capital flight from China? Surely a real impact on locals.
B: a fantastic example on how the market is in fact global and not local and why government intervention for the "local market" is often required and how policies on the other side of the planet, for their own local markets can effect our own local markets (see the effect of local policies in Germany and China to reduce consumption as GDP on other countries around the globe.)