In real terms, household net worth has grown at about a 3.6% annualized rate for the past 65 years.
Friday, September 16, 2016
Today the Fed released its Q2/16 estimate of the balance sheets of U.S. households. Collectively, our net worth reached a new high in nominal, real, and per capita terms. We are living in the weakest recovery ever, and things could and should be a lot better, but it is still the case that today we are better off than ever before.
As of June 30, 2016, the net worth of U.S. households (including that of Non-Profit Organizations, which exist for the benefit of all) reached a staggering $89.1 trillion. To put that in perspective, it's about 40% more than the value of all global equity markets, which were worth $63 trillion at the end of June, according to Bloomberg. I note that household liabilities have not increased at all since their 2008 peak; the value of real estate holdings now slightly exceeds that of the "bubble" high of 2006; and financial asset holdings have soared since pre-crash levels, thanks to significant gains in savings deposits, bonds, and equities.
On a real per capita basis (i.e., after adjusting for inflation and population growth), the net worth of the average person living in the U.S.has reached a new all-time high of $277K, up from $62K in 1950. This measure of wealth has been rising, on average, about 2.4% per year since records were first kept beginning in 1951. Life in the U.S. has been getting better and better for generations.
The ongoing accumulation of wealth is not a house of cards built on a bulging debt bubble either, regardless of what you might hear from the scaremongers. The typical household has cut its leverage by over 30% (from 22% to 15%) since early 2009. Households have been prudently and impressively strengthening their balance sheets over the past seven years. Unfortunately, our Federal government has more than doubled its debt burden over that same period, as I noted in a post earlier this week.
Posted by Scott Grannis at 11:40 AM