The U.S. is the King of Net Worth

The U.S. economy is the undisputed powerhouse of them all. Nothing says it better than the $170 trillion net worth of the U.S. private sector, and the fact that the market capitalization of U.S. equities is greater than the sum of all other global equity markets' market cap. The following charts provide interesting perspectives.

Chart #1

Chart #1 compares the market cap of the U.S. market against the market cap of all other equity markets. (I'm using Bloomberg's calculation, which excludes the value of ETFs and ADRs, so as to avoid double-counting.) The U.S. market cap just edges out non-U.S market cap, for the first time in the past 20 years.

Chart #2

Chart #2 shows the breakdown of the net worth of the U.S. private sector (households plus non-profit organizations). What jumps out to me is the fact that debt has increased by far less than financial and real estate assets. 

Chart #3

Chart #3 shows the net worth of the U.S. private sector adjusted for inflation. In real terms, private sector net worth has increased by 12,656% since 1952. A 13.66-fold gain in 72 years—annualized growth of just over 3.6% per year. And over the long haul, growth in real net worth has been relatively constant.

Chart #4

Chart #4 divides the data in Chart #3 by the population of the U.S. Per-person real net worth has increased by about 2.4% per year for almost 75 years. (The chart implies that the net worth of the average person in the U.S. is almost $500,000.)

Chart #5

To flesh out the implications of Chart #1, Chart #5 demonstrates that the overall leverage of the U.S. private sector has declined significantly since the Great Recession (2008-09), and is now back down to the level that prevailed in the early 1970s. This further suggests that the U.S. private sector is very financially secure on the whole. It's the U.S. government, of course that has been on a borrowing binge like the world has never seen.

Chart #6

Chart #6 details one measure of the evolution of the U.S. government's borrowing binge, which began in the wake of the 2008-2009 Great Recession. 

Chart #7

Chart #7 makes an important qualification regarding government debt. The true burden of debt is not the nominal amount (now $28.85 trillion, or about 96% of GDP), but the cost of servicing that debt (interest expense as a % of GDP). According to this latter measure, the burden of debt was much greater in the 1980s than it is now. Why? Because interest rates today are much lower.