Household Net Worth Hits A Record $95 Trillion... There Is Just One Catch

Tyler Durden's picture

In the Fed's latest Flow of Funds report, today the Fed released the latest snapshot of the US "household" sector as of March 31, 2017. What it revealed is that with $110.0 trillion in assets and a modest $15.2 trillion in liabilities, the net worth of the average US household rose to a new all time high of $94.835 trillion, up $2.4 trillion as a result of an estimated $500 billion increase in real estate values, but mostly $1.78 trillion increase in various stock-market linked financial assets like corporate equities, mutual and pension funds, as the stock market continued to soar to all time highs .

At the same time, household borrowing rose by only $36 billion from $15.1 trillion to $15.2 trillion, the bulk of which was $9.8 trillion in home mortgages.

The breakdown of the total household balance sheet as of Q2 is shown below.

And the historical change of the US household balance sheet.

And while it would be great news if wealth across America had indeed risen as much as the chart above shows, the reality is that there is a big catch: as shown previously, virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans.

As a reminder, from the CBO's latest Trends in Family Wealth analysis, here is a breakdown of the above chart by wealth group, which sadly shows how the "average" American wealth is anything but.

While the breakdown has not caught up with the latest data, it provides an indicative snapshot of who benefits. Here is how the CBO recently explained the wealth is distributed:

  • In 2013, families in the top 10 percent of the wealth distribution held 76 percent of all family wealth, families in the 51st to the 90th percentiles held 23 percent, and those in the bottom half of the distribution held 1 percent.
  • Average wealth was about $4 million for families in the top 10 percent of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt.

In other words, roughly three-quarter of the $2.4 trillion increase in assets went to benefit just 10% of the population, who also account for roughly 76% of America's financial net worth,

Even worse, when looking at how wealth distribution changed from 1989 to 2013, a clear picture emerges. Over the period from 1989 through 2013, family wealth grew at significantly different rates for different segments of the U.S. population. In 2013, for example:The wealth of families at the 90th percentile of the distribution was 54 percent greater than the wealth at the 90th percentile in 1989, after adjusting for changes in prices.

  • The wealth of those at the median was 4 percent greater than the wealth of their counterparts in 1989.
  • The wealth of families at the 25th percentile was 6 percent less than that of their counterparts in 1989.
  • As the chart below shows, nobody has experienced the same cumulative growth in after-tax income as the "Top 1%"

The above is particularly topical at a time when either party is trying to take credit for the US recovery. Here, while previously Democrats, and now Republicans tout the US "income recovery" they may have forgotten about half of America, but one entity remembers well: loan collectors. As the chart below shows, America's poor families have never been more in debt.

The share of families in debt (those whose total debt exceeded their total assets) remained almost unchanged between 1989 and 2007 and then increased by 50 percent between 2007 and 2013. In 2013, those families were more in debt than their counterparts had been either in 1989 or in 2007. For instance, 8 percent of families were in debt in 2007 and, on average, their debt exceeded their assets by $20,000. By 2013, in the aftermath of the recession of 2007 to 2009, 12 percent of families were in debt and, on average, their debt exceeded their assets by $32,000.

 

The increase in average indebtedness between 2007 and 2013 for families in debt was mainly the result of falling home equity and rising student loan balances. In 2007, 3 percent of families in debt had negative home equity: They owed, on average, $16,000 more than their homes were worth. In 2013, that share was 19 percent of families in debt, and they owed, on average, $45,000 more than their homes were worth. The share of families in debt that had outstanding student debt rose from 56 percent in 2007 to 64 percent in 2013, and the average amount of their loan balances increased from $29,000 to $41,000.

And there is your recovery: the wealthy have never been wealthier, while half of America, some 50% of households, now own just 1% of the country's wealth, down from 3% in 1989, while America's poor have never been more in debt.

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LawsofPhysics's picture

DEBT...

 

War is Peace, Freedom is Slavery, Ignorance is Strength...

 

and for those of us in the "club"..  Knowledge is Power

JRobby's picture

"virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans."

"virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans."

"virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans."

"virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans."

Stage direction: audio: "The sound of 20 million magazines locking in sumultaneously"

(Theoretically, the largest armed force the world has ever seen)

Ace in the hole's picture

If only we all made the same income, wouldn't life be so much nicer?  Hey, move to Venezuela and see how much you like that.  Let's see, I bet all these "poor" Americans who can't "afford" to buy stocks, can somehow afford to buy a 65" LED Sony, and sport the latest iphone with its $500/Mo family plan, and drive their brand new loaded F150 4X4 with a 72 mo loan.  Well, we all have to make choices.  Consume or invest for later.  

Joe Davola's picture

You load 16 tons, whaddya get

Moe Hamhead's picture

....another day older, and deeper in debt!

Wild tree's picture

Sant Peter dontcha call me because I can't go....

I owe my soul to the company sto

 

Sharecropper.s song, as they had to borrow against the next year's crop in order to have seed and fertilizer to plant. Never seemed to work out that they have enough to have a surplus. Another type of slavery against the white man no one ever talks about now.

scrappy's picture

“[Very] soon, every American will be required to register their biological property in a national system designed to keep track of the people and that will operate under the ancient system of pledging. By such methodology, we can compel people to submit to our agenda, which will effect our security as a chargeback for our fiat paper currency. Every American will be forced to register or suffer being unable to work and earn a living. They will be our chattel, and we will hold the security interest over them forever, by operation of the law merchant under the scheme of secured transactions.”


“Americans, by unknowingly or unwittingly delivering the bills of lading to us will be rendered bankrupt and insolvent, forever to remain economic slaves through taxation, secured by their pledges. They will be stripped of their rights and given a commercial value designed to make us a profit and they will be none the wiser, for not one man in a million could ever figure our plans and, if by accident one or two should figure it out, we have in our arsenal plausible deniability. After all, this is the only logical way to fund government, by floating liens and debt to the registrants in the form of benefits and privileges. This will inevitably reap to us huge profits beyond our wildest expectations and leave every American a contributor to this fraud which we will call “Social Insurance.” Without realizing it, every American will insure us for any loss we may incur and in this manner, every American will unknowingly be our servant, however begrudgingly. The people will become helpless and without any hope for their redemption and, we will employ the high office of the President of our dummy corporation to foment this plot against America.”

 

Timeline of the Great Fraud.

https://mainerepublicemailalert.com/2016/05/26/timeline-of-the-great-fra...


. . . _ _ _ . . .'s picture

"...all these "poor" Americans..."

Don't you think that there are any truly poor Americans, you heartless schmuck?

Where did you source your data? Have you seen what's been happening in the retail sector? Do you think the vast majority of the unemployed are so because they want to be? People don't have jobs, not because they don't want to work, but because they can't find jobs thanks to disaster-capitalist speculators ruining the economy (like you, maybe, hunh.) You don't seem to have a grasp on economics; you must work in the financial sector. Do you think everyone can be business owners? And NO, I am not a socialist. I am not a capitalist either. (I can hear your brain grinding to a halt right about now. Yes, there are many many other options.)

Do you understand that there needs to be a certain level of poverty in order to keep inflation down? Do you not see that you owe everything you have to the fact that there are real men and women out there who do not need all your luxuries just to make them feel like they have some value, to make themselves feel important, like you do? Do you not also understand that if there weren't any poor, there could not be any rich? Did you get all that or do I need to type slower for you?

Yes there are those who live beyond their means, but they are middle-class homeowners, for the most part, but I doubt that those in the bottom 20% (who you've probably not met since high school) have any of the fancy things you say. If someone can't afford to go out and live in the fast lane, then yeah, they should at least get a nice TV, if that's their thing; after all, they're probably too tired to go out at the end of the day because, unlike you, they actually work for their (meager) living.

I guess that's just how you justify your twenty dollar martinis, your hundred dollar haircuts, your $100k Tesla, and your quarter-million dollar coke habit.

See, we can all generalize, but that don't make us right. You and your kind will be the first ones up against the wall when the revolution comes. Good luck with that.

. . . _ _ _ . . .'s picture

I get a downvote instead of a reply.

So you're a coward, too. Pathetic, ignorant, dispicable you. The fact that there are so many like you is what is ruining your country.

Play the fiddle?

Liosnagcat's picture

"Do you think the vast majority of the unemployed are so because they want to be?"

 

Nah, just the black ones.

alfredhorg's picture

My sentiment exactly.  If a janitor can save and invest $8 million, then why can't the rest of low-wage Americans?

https://howibeatgold.wordpress.com/2017/03/27/janitor-amassed-an-8m-fort...

divingengineer's picture

I don't want to be a turd in the punch bowl here, but by definition don't assets have to equal liabilities on any properly prepared balance sheet? I'm not acquainted with the ways of "high finance", but do not even the most basic rules apply?

Endgame Napoleon's picture

This does not have much to do with printing presses. This is due to inheritances at the very top and, in the the top 20%, two people with high-wage jobs marrying and concentrating the wealth from the few, good-paying jobs in fewer households, i.e. feminism, particularly the womb-based feminism of the 3rd wave. The 1% and 20% groups of salaried wealth holders, as opposed to wealthy job creators, overlap [some] as well, investing the money they make in non-risky, salaried employment in low-risk, global ventures that reap the rewards of low-cost, offshored labor.

What we need is paid family leave to make sure even fewer jobs open up when highly-paid women, married to highly paid men, make the life decision to have babies. They and their low-wage welfare/taxfare, married and child support-augmented momma-clique colleagues already have an enormous amount of unofficial, excused time off in the workplaces they dominate, with everyone else held to the minute, even when they never miss a day of work, stay all day and meet the quotas every month, which is not necessary if you a working momma. Many people have zero unearned, womb-based income to pump up the $10 wages from temp, part-time churn jobs.

insanelysane's picture

Lies are truth.

Minority are the majority.

Restrained speech is free speech.

 

Miffed Microbiologist's picture

So if I borrow a million, I'm really not a millionaire? Wow, conceptually I'm having problems with this. Barbie was right, math is hard.

Miffed

Endgame Napoleon's picture

Well, if you borrow a million or FAR less than that in a business, back when I owned a little shop, they taxed you on it like was income. It was not INcome. It was going OUT the door every month until the loan was paid. So, I guess a borrowed million is regarded as income, but not on a mortgage.

Iconoclast421's picture

One catch: central banks own half of it, and printed the other half.

Give Me Some Truth's picture

If anyone wonders where the government's record tax receipts are coming from, I submit they are coming from capital gains taxes (not payroll taxes). I wish someone would do some reporting and present these YoY figures. How much more $ is the government getting from capital gains receipts than in previous years?

Another reason the stock market can't fall.

 

 

JRobby's picture

The bullshit ADP report is "no longer in the workforce" adjusted, "seasonally" adjusted, "birth / death" adjusted etc., etc. etc.

LETS SEE MONTHLY 941 COLLECTIONS AND ESTIMATED QUARTERLY PAYMENTS for the LAST 9 YEARS

NOW!

AGuy's picture

"If anyone wonders where the government's record tax receipts are coming from, I submit they are coming from capital gains taxes (not payroll taxes)."

FWIW: My tax rate increased about 7% to 8% since Obozo's tax policies were enacted. I suspect its largely the top 10% that are paying for the revenue increases.

Endgame Napoleon's picture

I do not really understand that totally, but hmmm, does that have anything to do with offshoring millions of jobs and, thus, not having those workers to pay into the SS system?

BennyBoy's picture

 

Household Net Worth Hits A Record $95 Trillion


Banks Net Worth Hits A Record $95 Trillion
Silver Savior's picture

Not anymore. I got tired of being a debt serf. Never again. 

Endgame Napoleon's picture

Even when you paid your business loan back, it does not mean you can get another loan, INCLUDING when you have good credit. You need a hubby with a spousal income backing you up or collateral, 'cause you're a momma who got the house after a failed marriage due to your womb productivity. Even if you spend half the day doing crafts with your kids at work, and instructing employees to do the same rather than cold calling, you'll get the loan as a momma with the womb-based collateral. It is always about something other than the work.

any_mouse's picture

Serfs Down. Always and Forever.

I was going to post "Up", but somebody gets up earlier than I do. I already had in mind "Down" as an alternative.

I thought the numbers, trillions, were made up and this was about some future dystopia.

Oh wait, the economy is make believe.

Endgame Napoleon's picture

Well, you cannot generate more income without having money to invest in a business, and if you did not get some unearned income via the luck of the draw or by building it up via some kind of work that pays more than subsistence wages, you have to borrow.

Serf = 1 choice

amadeus39's picture

There is only one good reason to borrow money... to make more money with the money you borrow than what it costs you to borrow.  Otherwise, wealth is transferred from the borrower to the lender.

 

Silver Savior's picture

I don't get it. What household assets are valuable? I heard around 1% hold precious metals so what is of value other than precious metals? Everything else are depreciating liabilities.

Ha ha ha. Fake wealth. Good luck liquidating all that crap to the low bidder. 

Looks pretty on paper I guess. Too bad ya can't do anything productive with it.

Endgame Napoleon's picture

I think the smartest people are the ones who either buy low-maintenance land close to a developed area or a small, modest house in a very nice area. I have seen people do that, with others scoffing at them during this McMansion period. One of these people decorated and renovated her house better than any of them. It is stunning, although it's just a small house in a really fine area. People who pay houses like that off probably have good assets, right? I would think so, not that I would really know. It seems like that would always be a little more valuable, no matter what happens to the rest of the market, just by virtue of the area. But these people did not pay too much for the house, itself, as it was not a trendy style at the time. All of you Z-Hedgers talk about the math, but not the irrational things that motivate buyers, like style. Women and even some men are VERY motivated by such things in more cases than you think. A lot of these metrosexual men are quite motivated by style, whether gay or straight.

Trade Maiden's picture

Won't be worth shite as the U.S Dollar craters in coming years.

Kong has caught the bottom on this near term bounce but....USD doomed longer term.

www.forexkong.com

 

Silver Savior's picture

I am completely obsessed with the dollar failing. It was the biggest mistake there ever was.

Pollygotacracker's picture

Call it financial engineering. Why people aren't up in arms over this is beyond me. 

small axe's picture

"It is well that the people of this nation do not understand our banking and monetary system, for if they did, I believe there would be revolution before tomorrow morning."

-Henry Ford

. . . _ _ _ . . .'s picture

"The Canadian national debt when Pierre Elliot Trudeau (Justin's father) took office (April 20, 1968) was $14B. When he left office (June 30, 1984,) it had reached $130B. That’s a factor of nine within sixteen years. At that rate, the debt would have been over $11T by 2016. <sarc>Thankfully, it’s only $613B now.</sarc>"

33 years later, and still no revolution. Are we too polite, or do we need new gun laws... or both?

Anon2017's picture

Did you forget about Canada's financial crisis of the late 1990's? The US has not experienced its day of reckoning yet, but eventually it will come.

amadeus39's picture

They can still afford  to eat a lot of cake.

 

Insurrexion's picture

Show this shit to your nearest Social Justice Warrior.

Ask them What-the-fuck?

Wait for a fucking blank stare.

"It's Trump's fault!"

Pairadimes's picture

Worse than that. They will demand that the federal government do something to fix it. 

Haitian Snackout's picture

Umm......That's Social Just-us Warrior.

 

Kreditanstalt's picture

"Real estate" is not a "tangible asset" - it's an expensive gamble...a speculation.  Just wait til someone starts to (try to) SELL...

hongdo's picture

What is Truth?

What is Wealth?

Even "Cashing Out" is not necessarily wealth.

duckandcover's picture

Mark 2 Market looks to be working just fine