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Household Net Worth Just Hit A Record High: Here Is Who Benefited
A few days ago, the Fed proudly declared that in the quarter ended June 30, household net worth rose by another $1.4 trillion hitting a record $81.5 trillion.
A stunning accomplishment which, however, as we explained, was exclusively due to the artificial rise in financial assets courtesy of $10 trillion in central bank liquidity levered some 2-3 times by the dealer/bank/hedge fund community.
Needles to say, if indeed the US economy had boosted everyone's income by $1.4 trillion in the past quarter, USD GDP would now be growing at a double digit pace. It did not. So to get a sense of just whose net worth rose by the noted amount, we go to Stone McCarthy which answers the question who benefited from holding stocks directly. To those who have read Piketty, socialist conclusions notwithstanding, the answer was revealed long ago: the entire increase in "net worth" went to a tiny sliver of US society. The richest.
From SMRA:
Since the end of the first quarter of 2009 -- when the stock market bottomed -- households' collective net worth has increased by $26.5 trillion. More than 75% of that increase -- $20.1 trillion -- reflects the change in market value of assets. Gains in the value of real estate assets account for $3.6 trillion of that increase, while gains in the value of financial assets account for the rest.
Of various classes of financial assets, equities held directly by households increased in value the most over the last six years, rising in value by $9.2 trillion. Today's Chart of the Day shows the cumulative gains in the market value of equities held directly by households.
Not that many households hold equities directly, however. (And it's important to remember that the household data in the Z.1 report includes holdings of hedge funds, private equity funds and personal trusts.) The Fed's 2013 Survey of Consumer Finances showed that just 13.8% of families held stocks directly in 2013, down from 17.9% in 2007 before the financial crisis. Our next chart shows the percentage of families with direct holdings of stocks by income percentile in each of the SCFs since 1989.
The share of all families holding stocks directly peaked in 2001, after the dot-com bubble. The share of families holdings stocks declined for most income percentiles from 2001 to 2013, even those families in the 90-100th income percentile.
Bottom line: the gains in net worth associated with holding stocks directly have been concentrated among a relatively small number of households.
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Just buy the fucking dip....It's all bullshit!!!
90% of the US is broke....what did you expect
Pension funds?
Important for Amerikanski citizenry for recognize prosperity is calculate by take entire asset base and is dividing by population. There, you are now all happiness and joy! Eat ramen and fix cardboard roof for full effect.
Yeah that is a valid approach.
I heard USA Could Buy Canada for something like $2 Million dollars per Canadian Citizens ... and it would be worth the price easy due to the Natural Resources & Mining Value in Canada.
For the USA it might have to be off set by the Total US Debt, but in any case I think the value of US Citizen would be less than $100K.
Article missed something.
"Of various classes of financial assets, equities held directly by households increased in value the most over the last six years, rising in value by $9.2 trillion. "
We would expect after US Financial Crash, the bottom of the market to today, the wealthy oligarchs would buy stocks and as the market is at world record today... they doubled their wealth.
Bad mistake on article.
houses are too expensive
They are not commodities, but rather 'investments,' remember?
A house is a 30 - sratch that - 50 year investment, to be paid off by your grandchildren.
With a durable life of 15 years tops.
you have to rebuild them three times to make it to pay off...
No kidding. I drop at least several thousand a year maintaining it so it doesn't rot away. nothing but a money pit.
You must supplement income. You are come work for Boris. Bring thick leather glove and rubber boot.
Yes, but RE is always(!!!!) a good investment (even if you pay 5-10x what it's worth!!!) and you've got to get it NOW before the price goes up even further!!!!
So, run out and get a BIG mortgage right now ...don't wait, there's no time!
(whatever you do, don't save and wait til you can afford it!...besides poor bankers need a little interest income to put bread on the table, don't they?)
A mortgage is nothing more than paying rent to the bank. Taxes are nothing more than rent to the government. is it ever really an investment? I guess you gotta live somewhere.
And the rent is too damn high!
House prices keep climbing because it's baked into the DNA of the FIRE*
Note that every time you sell a property, there is a 6% RE Commission that gets built into the price. And Americans don't stay put for long... the same house gets sold over and over many times, and each time the RE fees and Closing Costs are created and often amortized.
* Finance, Insurance, Real Estate
So, how come my bank account keeps going down each month?
You're not doing it right. You have to buy moar stawk$$$.
Because you're lazy. And if you're over 35, you deserve it.
Am I doing this right Mr. Ma?
BTFD = Market Timing.
Good luck.
So basically, the rich are getting richer. Shocker!!
Mine is mainly in "other assets"
Well, whoever it is, I'm happy for ya. Now if you''ll excuse me, I've got to get back to fighting off the rats and cockroaches.
Eric Holder is a crook
Whoa! Whoa! WHOA!! there, big fella....that's a might controversial for ZH...
and he's just a pissed off negro in general.
Why does Erikkk look like Joseph Goebbels' great-nephew?
Its the short Military Mustache... Not to exceed beyond the width of your nose and if you have a big nose then shorter.
off topic:
Ebola smoothed new case rate (does not include DRC outbreak data):
22 Sep 14 - 124/day
20 Sep 14 - 118/day
18 Sep 14 - 113/day
16 Sep 14 - 101/day
12 Sep 14 - 92/day
08 Sep 14 - 86/day
04 Sep 14 - 75/day
28 Aug 14 - 69/day
22 Aug 14 - 59/day
20 Aug 14 - 54/day
19 Aug 14 - 46/day
15 Aug 14 - 54/day
13 Aug 14 - 40/day
11 Aug 14 - 37/day
08 Aug 14 - 54/day
06 Aug 14 - 55/day
04 Aug 14 - 57/day
02 Aug 14 - 43/day
29 Jul 14 - 38/day
27 Jul 14 - 23/day
23 Jul 14 - 12/day
17 Jul 14 - 10/day
Case Fatality Risk Estimate: 48%
Active Case Growth Rate: 4.5% per day
Health worker deaths/cases: 194/355 as of 18 Sep
(22 Sep release contains data through 19 Sep, updated to 22 Sep with info from MoH sites)
http://apps.who.int/iris/bitstream/10665/134449/1/roadmapupdate22sept14_...
https://www.internationalsos.com/ebola/index.cfm?content_id=395&language...
http://www.mohsw.gov.lr/documents/Liberia%20Ebola%20SitRep%20130%20Sept%...
http://health.gov.sl/wp-content/uploads/2014/09/Ebola-Situation-Report_V...
So it's getting better...
How come the rich people in Africa never get Ebola??
contained
I can see tomorrow,
I can see the world to come,
I can see tomorrow,
In the pandemonium.
Killing Joke destroys fear.
can i get 'trickle down' in any other color than yellow?
Brown. That's all.
Digging down in Z.1:
"Nonfinancial business debt rose at an annual rate of 6.3 percent in the second quarter, about in line with the increase in the first quarter. As in recent years, corporate bonds accounted for most of the increase."
Bonds for buybacks.
Good advice: don't be poor, life is very unplesant.
They 4got to mention that the middle class gets 100% of all the debt created!
< 1%
An aside, can anyone explain the difference in the following columns between the June Z1 and the current Z1?
D.3 Credit Market Debt Outstanding by Sector -> Domestic Nonfinancial Sectors -> Business -> Corporate
It's like $2.2T in liabilities just disappeared, with revisions back to 2003 !?
http://www.federalreserve.gov/releases/z1/current/z1.pdf
http://www.federalreserve.gov/releases/z1/20140605/z1.pdf
Yeah, looks funny to me:
- comma delimited
2013 Total, 2013 Corporate,
$13604.4, $9407.1,
Current Total, Current Corporate
$ 11298.0, $7118.0,
All Dollars are in Billions
Looks like ...corrected my numbers.
Rounded to nearest billion, here are the differences between Sept and June releases for the Corporate column from 2001 to 2013:
-169 -229 -314 -420 -525 -669 -874 -982 -1190 -1451 -1693 -1949 -2289
They also altered the Foreign column, here are those differences:
-52 -141 -122 -176 -189 -253 -164 -148 -125 -56 -28 44 43
There were some revisions between the March release and the June release, but nothing of this magnitude. Looks like something has been left out.
Trying to think about 1998 and what was happening.
- Sub-prime mortgages 1995
- Community Reinvestment Act, in 1995 the Clinton Admin urged flexibility,
- HUD advocated greater involvement of state and local organizations 1995
- Brooksly Born Rejected on her concerns on OTC Derivtives 1998
- Derivatives expanded and were not regulated 1998
- End of Glass Steagal Act 1999 Gramm–Leach–Bliley Act (GLBA)
- Clinton's Kosovo War 1998
- Citicorp & Travelers Insurance Merger 1998
- NAFTA Treaty 1994 could impact, CAFTA-DR 2005 Related Progression
As an accounting Function, say Debts or Funds or Loans were lost in the 911 Attack or Iraqi War Period... would they go back and wipe those debts off of accounts?
http://www.federalreserve.gov/releases/z1/z1_technical_qa.htm#z19
They purportedly understated bond retirements; so just like that, $2.2T in corporate liabilities have been lopped off! Reminds me of that phrase 'good enough for government work'...
Well,... thanks. TPTB have clearly Gamed the system.
Well how to get GAO or Government IG Inspections?
corrected my numbers. Yes, I would say corporate numbers are significantly changed back to 1998 where it starts to look like $100 Billion difference.
This Zero Hedge article is spot on in that most wealth is not in tangibles. The really big earners in recent years have benefited greatly from the surging stock prices as much of their income has come from financial markets and gains in equities. Many people seem to think this is the hope of our future.
When you have more than you need or want to put money away for a rainy day where do you store it? If you rated people on a "wealth chart" by how many tangible assets they owned you might be shocked to find much of the wealth people own is in paper and this is full of risk. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/08/where-wealth-is-held.html