Thursday, June 09, 2011

Household Net Worth Increases $10T in 2 Years

The Federal Reserve released data today on household balance sheets, and reported that household net worth increased to slightly more than $58 trillion in the first quarter of 2011, the highest level since the second quarter of 2008, almost three year ago (see chart above).  From the recession-driven low of $47.75 trillion in the first quarter of 2009, household net worth has experienced a V-shaped recovery of more than $10 trillion in just two years.  Without adjusting for inflation or population, the net worth of U.S. households has increased by 45% since 2002, and has doubled in the 15 years since 1996.  And in the twenty years since the early 1990s, the net worth of American households has almost tripled, having gained almost $40 trillion of wealth in just several decades.    

Bottom Line: It took more than several hundred years until 1996 to create $30 trillion of wealth for U.S. households, and then that much wealth ($30 trillion) was created again over just the last 15 years. And despite the Great Recession, a severe financial crisis, and a collapse of housing prices, more than $10 trillion of wealth has been created over the last two years - that's a testament to the resiliency and dynamism of the market.  


At 6/09/2011 3:15 PM, Blogger morganovich said...

i wonder how much of this increase is due to foreclosures on underwater homes and credit defaults.

clearly the equity markets have played a role, but i suspect those other two factors have been quite significant as well.

At 6/09/2011 3:33 PM, Blogger Cooper said...

"Without adjusting for inflation or population" I'd like to see that correction

At 6/09/2011 3:39 PM, Blogger Bernie Ecch said...

How much of that increase went to the top 1% or 10%?

At 6/09/2011 4:48 PM, Blogger Rufus II said...

All of it.

At 6/09/2011 5:05 PM, Blogger Big Pizzle said...

Perhaps a more appropriate questions might be: Of the wealth created, what percentage was directly attributed to the efforts of the top 1% or the top 10% of wage earners?

At 6/09/2011 5:34 PM, Blogger juandos said...

Now that we've had a couple of doses of that 'quantitative easing', what's that amount of money really worth in practical, everyday necessities?

At 6/09/2011 5:59 PM, Blogger Ron H. said...

Bernie asks: "How much of that increase went to the top 1% or 10%?"

Rufus responds: "All of it."

Rufus, do you have a credible source for that claim, or is this just some emotional appeal you've pulled out of your ass?

Actually, it would be good if you were correct, as that could be an ndication that new employment opportunities will soon appear.

At 6/09/2011 6:30 PM, Blogger PeakTrader said...

Americans' equity in their homes near a record low
June 9, 2011

The average homeowner now has 38 percent equity, down from 61 percent a decade ago.

There are 74.5 million homeowners in the United States. An estimated 60 percent have a mortgage. The rest have either paid off the loan or bought with cash.

Of the people who have mortgages, 23 percent are "under water"...An additional 5 percent are nearing that point.

The Fed's quarterly report...found that corporations are still hoarding cash. Excluding banks and other financial firms, companies held $1.9 trillion in cash at the end of the quarter.

Household net worth in America is up nearly 19 percent from early 2009 but still about 11 percent below its peak in 2007.

The report found household debt declined at an annual rate of 2 percent from the previous quarter, mostly because of a decline in mortgage debt, which has fallen for 12 straight quarters.

But the decline is deceiving. Mortgage debt is coming down because so many Americans are defaulting on payments and losing their homes to foreclosure, not just because people are paying off loans.

At 6/09/2011 11:30 PM, Blogger Hydra said...

Ten trillion created or recovered is more like it. Also the money was likely made by others than those that lost it. And, as morganovith points out, you could lose your home and s

At 6/09/2011 11:32 PM, Blogger Hydra said...

The top 1% I know put forth very little effort. They are retired or dabbling on their vineyard.

At 6/10/2011 2:20 AM, Blogger PeakTrader said...

Saving takes less effort than spending, but it's a lot harder to do.

At 6/10/2011 7:29 AM, Blogger morganovich said...

"The top 1% I know put forth very little effort."

the top 1% i know work like demons. they own companies and create good, services, growth, and jobs.

your assertion that they are somehow a leisure class is ridiculous.

At 6/10/2011 7:32 AM, Blogger morganovich said...


if we use a traditional measure of inflation (BLS pre 1992) inflation is running at about 8%.

that means prices are up 16.6% in 2 years.

that alone would take 47tn in wealth and turn it into almost $55tn meaning that 72% of this "gain" in nominal, but not real.

At 6/10/2011 8:11 AM, Blogger juandos said...

Here's a nugget from Bloomberg that might be considered a follow up of the comment PT made: "Americans' equity in their homes near a record low"

Shiller Says U.S. Home-Price Declines of 10% to 25% ‘Wouldn’t Surprise Me’

Robert Shiller, the economist who co- founded the S&P/Case-Shiller index of U.S. home prices, said a further decline in property values of 10 percent to 25 percent in the next five years “wouldn’t surprise me at all.”

“There’s no precedent for this statistically, so no way to predict,” Shiller said today at a conference hosted by Standard & Poor’s in New York...


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