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This post extends a series of similar posts I've made over the past 15 years. It highlights the net worth of the U.S. private sector: the net value of assets and liabilities of individuals and non-profit organizations. As of June '24, the total net worth of the U.S. private sector was $164 trillion, and the net worth of the average person living in the U.S. was almost half a million dollars.
Does the proliferation of billionaires distort the picture? Not much. According to Forbes, at last count the U.S. had 2,800 billionaires, whose net worth totaled in the range of $17-20 trillion. The net worth of the Forbes Top 400 billionaires totaled $5.4 trillion. If we exclude all billionaires from the total, the net worth of the average American would be about $425K, which is still pretty impressive.
Chart #1
As Chart #1 shows, private sector net worth has increased by 167% over the past 20 years, and now stands at $164 trillion. The biggest gains have come from financial assets (stocks, bonds, and savings accounts), which have increased 149%. Real estate assets have increased 144%, while liabilities have increased a mere 44%. The federal government is heavily indebted, but not so the private sector!
Chart #2
Chart #2 shows the real, inflation-adjusted value of private sector net worth. Net worth peaked at 166.7 trillion in December '21, and has since declined to $164 trillion. The rather spectacular gains of the stock market and housing in recent years have been diluted by inflation. Still, real net worth is still on a rising path, averaging gains of about 3.6% per year.
Chart #3
Chart #3 divides real net worth in Chart #2 by the U.S. population (about 342 million). Real per capital net worth peaked at $509,500 in 12/21, and fell to $481,000 through June of this year, due to the effects of inflation and an increasing population. Still, it has risen on average by about 2.4% per year. If this continues, by 2054 the average American will be worth $1 million in today's dollars.
5 comments:
Sometimes I think you get caught up in the minutia of your charts and data and fail to realize that the top 10% own more than 70% of the nations wealth. The bottom 50% of the population have little to zero net worth.
Wealth is not a zero sum game. When someone gets rich it is not necessarily the case that someone else must get poor. The vast majority of the wealth of the rich is held in the form of equity in businesses that produce things of value to society while employing people in the process. The non-rich get to enjoy all of the things that have produced the wealth of the rich (e.g., great products and services, jobs, plus infrastructure). Why worry that the owners of the company that invented the iPhone got rich, when iPhones have improved the lives of billions of people and created new industries from scratch?
Medians are a very important statistic for macroeconomic studies.
The health of an economy/society is tied to the amount of private ownership. If the median household/individual is able to own less and less, that economy/society will show serious strain. Professor Friedman wrote extensively on this.
(home ownership, vehicle ownership (without loan), self-employment are all down over the past few decades)
If you don't own your residence, vehicle, business, you have a lower sense of responsibility as a citizen. The US is showing the results of this right now.
Excellent as usual, Scott. Yes, the household net worth is remarkable. For people's comments about wealth inequality, this isn't the right way to think about it. It is much better to think about consumption equality. The reality is that someone like Elon Musk eats at McDonalds, watches Netflix, uses social media, and can only use 1 toilet at a time. This makes his daily existence remarkably equal to most other people in the U.S. Elon Musk can't personally consumer 99.9% of his wealth. Wealth equality and income equality are the wrong metrics to focus on. Consumption equality needs to get a lot more attention.
DanQ: I completely agree with you on consumption equality.
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