Thursday, December 6, 2012

Households' balance sheets continue to improve

Household net worth rose $4.5 trillion in the first nine months of this year, according to the Federal Reserve, driven by strong gains in financial assets and rising real estate values.

Household net worth is still about $2.5 trillion shy of its Q3/06 peak of $67.3 trillion, but the recovery from the recession lows has been significant.

Notable year to date progress (rounded):

Savings deposits +$200 billion
Corporate equities +$1,070 billion
Mutual fund shares +$900 billion
Pension fund reserves + $900 billion
Real estate +1,150 billion

No doubt about it, things are getting better.


Gloeschi said...

Things are getting better, yes, for the top decile of the population that owns financial assets. For the rest, it's declining real disposable income. It will be a small consolation for the poor that most of the financial paper assets of the rich will eventually go up in smoke once the Fed achieves its goal (inflation).

McKibbinUSA said...

The middle-class is enduring long-term declines in real working wages, real home values, and the employment to population ratio -- once all of those measures are above their former highs, I'll agree that life for ordinary Americans has improved...

Gene Prescott said...

Assuming the Federal Reserve 'base' being measured includes all households, it is difficult to imagine that dividing into two charts (one top 1%; other the 99%) would show all of the net worth improvement attributable to the 1% and the 99% having a continuing decline in net worth.

ChronicleSmith said...

Wanted to report from down under re your PPP analysis from a few days back. Your .66 valuation calculation feels right. Petrol, Big Macs, shampoo at Target, even fresh vegetables at the local IGA are all right in that range. A lot of crying and moaning about costs from the locals here in Melbourne (where I just arrived). Best, Bill Smith

Scott Grannis said...

Thanks Bill, it's nice to have my theory confirmed by the facts on the ground.