Bear Market Rally Working: Consumer Wealth Up 5% To $53.4 Trillion, Courtesy Of $2.3 Trillion In Market "Gains" As Deleveraging Continues

Tyler Durden's picture

According to the latest Flow of Funds report, household net worth increased by $2.7 trillion, of which 85% was the result of an increase in "Equity Shares at Market Value." With the mortgage piggy bank shut down for years, the only capital appreciation recourse for Americans has become the uber-manipulated stock market. Zero Hedge expects another TV appearance by Obama within 24 hours, in which, to great pomp and circumstance, he will announce this increase without highlighting what the actual reason (Liberty 33, wink, wink; vertical yield curve) for the increase is. In other not so shocking news, consumer deleveraging continues with $113 billion in debt wiped out from both mortgage and consumer credit in Q3. Who took its place? Why the US government, which borrowed more than enough: Federal government debt outstanding increased by 20.6%! Welcome Central Planning - we eagerly await Obama's announcement of the first five year plan in one of the 10 or so daily TV spots he has reserved until Christmas.

Summary from Z.1:

Debt of the domestic nonfinancial sectors is estimated to have expanded at a seasonally adjusted annual rate of 2¾ percent in the third quarter of 2009, about 1¾ percentage points slower than in the previous quarter. Private debt contracted in the third quarter, while government debt expanded.

Household debt contracted at an annual rate of 2½ percent in the third quarter, its fifth consecutive quarter of decline and the largest decrease on record. Home mortgage debt fell at an annual rate of 3½ percent, a significantly steeper decline than in the second quarter, while consumer credit contracted at an annual rate of 3¼ percent. Other components of household debt expanded in the third quarter, partially offsetting the decline in mortgages and consumer credit.

Nonfinancial business debt contracted at an annual rate of 2½ percent in the third quarter; the decline was widespread across credit market instruments.

Government debt continued to grow in the third quarter. State and local government debt expanded at an annual rate of 5 percent, 1½ percentage points faster than in the second quarter. Federal government debt increased at an annual rate of almost 21 percent in the third quarter, somewhat slower than in the second quarter, but nonetheless the fifth consecutive quarter of growth exceeding 20 percent.

At the end of the third quarter of 2009, the level of domestic nonfinancial debt outstanding was $34.6 trillion; household debt was $13.6 trillion, nonfinancial business debt was $11.1 trillion, and total government debt was $9.9 trillion.

Household net worth—the difference between the value of assets and liabilities—was an estimated $53.4 trillion at the end of the third quarter, up $2.7 trillion (5 percent) from the second quarter and the second consecutive quarter of growth.

Total Household Assets and Net Worth with equity contribution broken out:

Total Household Debt: