Household Wealth Hits A Record $96.2 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 June 30, 2017. What it revealed is that with $111.4 trillion in assets and a modest $15.2 trillion in liabilities, the net worth of US households rose to a new all time high of $96.2 trillion, up $1.7 trillion as a result of an estimated $564 billion increase in real estate values, but mostly $1.23 trillion increase in various stock-market linked financial assets like corporate equities, mutual and pension funds, and deposits as the market soared to new all time highs thanks to some $2 trillion in central bank liquidity injections this year.

Total household assets in Q2 rose $1.8 trillion to $111.4 trillion, while at the same time, total liabilities, i.e., household borrowings, rose by only $15 billion from $15.1 trillion to $15.2 trillion, the bulk of which was $9.9 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 all of 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 published last year, 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 75% of the $1.8 trillion increase in assets went to benefit just 10% of the population, who also account for roughly 76% of America's financial net worth.

It also means that just 10% of the US population is worth $73 trillion, while half of the US population was worth just ~$9.6 trillion.

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% 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 - as we say quarter after quarter- is your "recovery": the wealthy have never been wealthier, while half of America, some 50% of households, 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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Government needs you to pay taxes's picture

God bless Murrica.  I'm rich, bitchez, and you can pick my cotton . . . for two bits a day.

Shitonya Serfs's picture

No thanks, bro, I'm in the bottom 50. I'll just wait for my free stuff and sit here watching muh tablet.

Stuck on Zero's picture

The charts point out that a 20% wealth tax on the wealthiest 10% would pay off the national debt. Go for it Trump.

DWD-MOVIE's picture

I'm making over $14k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...  http://disq.us/url?url=http%3A%2F%2Fwww.Jobzon3.com%3Ab8eR_DQLwGRPVGtFvv...

ElTerco's picture

Sounds like your Ponzi is coming along nicely.

Stan Smith's picture

While this is disconcerting,  it also shows how little the "bottom half" has ever really had.

Forbes's picture

Well, as the US keeps importing poor, unskilled people from the third world, the "bottom half" is going to be poor. That's what's called a tautology. The poor will always be poor and the rich will always be rich because the analysis doesn't track people, it tracks income/wealth. 

Anon2017's picture

"the net worth of the average US household rose to a new all time high of $96.2 trillion" I don't think so. Did you mean thousand?

vesna's picture

What is the net value of average US household??????

booboo's picture

As long as I can afford Grey Poupon and a Timex with a leather wrist band I'm good, it's all about optics,'I named my dog "Jeeves" to impress the chicks too.

2banana's picture

Eight years of hope and change.

Well, we got the change alright.

Peddling fiction!

Not a smidgen of corruption!

Swamp Yankee's picture

If we get to count our debt as an asset then we get to be stoooopid rich too!

7thGenMO's picture

+1 - But it will take time for the sheeple to figure out (because we had a hard money system for so long) that, now that we have fiat debt obligations somewhat backed by dead plant material (petrodollars backed by crude oil), that society as a whole cannot advance because the oligarchy that owns The Fed and TBTF banks treat loans as an asset, while the bottom 90% get the debt.  The pluses (assets) and minuses (debt) effectively cancel each other out - there is no net wealth creation in society as a whole.  AUDIT THE FED!

E.F. Mutton's picture

Do my financed tattoos count as an asset?  Spinning rims?  Hair extensions?

bonin006's picture

You might be able to monitize the tatoos by selling rights to your skin, effective after you die. I am assuming you probably want to keep it while you are alive.

Vlad the Inhaler's picture

This is exactly the part of inflation that the Fed doesn't understand.

Blankfuck's picture

Everything is FED RESERVE FUCKER GOOD FOR THOSE BANKER FUCKERS AND COLLUISION KINGPINS

buzzsaw99's picture

just as the bottom 50% isn't aware that the fed exists likewise the fed doesn't know that the bottom 50% exist.  neither does congress.

Nature_Boy_Wooooo's picture

Look we increased the demand for housing through mass immigration and made you wealthy just by owning real estate.

JoeTurner's picture

To quote the great Jordan Peterson, "Advanced societies need innovation to thrive, we pay for innovation with inequality. That works until the inequality gets too far out of whack then the whole society wobbles and falls over."

1835jackson's picture

You do realize that 99% of people do not give a galatic fuck about this right? Only 1% of people read. 

Mr. Universe's picture

Reading, that's sooo last century.

According to a study conducted in late April by the U.S. Department of Education and the National Institute of Literacy, 32 million adults in the U.S. can't read. That's 14 percent of the population. 21 percent of adults in the U.S. read below a 5th grade level, and 19 percent of high school graduates can't read.Sep 6, 2013

The average reading level of American adults is about 7th to 8th grade level. A readability score is given as a “grade level,” but a score doesn't tell us whether an adult with a specific level of education will be able to read the text.
19% of HS gads can't read? How did they graduate? Average reading level is that of a 12/13 year old? Department of Education (along with the entertainment industry) has done it's job. Now they are cranking out SJW's too stupid to know they are sheep being led to slaughter.
rejected's picture

Don't have to read,,, do math,,, memorize history,,, and on and on...... isn't that what those iThingies and conpooters are for?

All the government skools require them now and claim this is much more efficient and provides a better education.

Gee, soon humans won't have to 'learn' or memorize anything,,,  even their name and SSN,,, provided by a brain implant at birth.

ElTerco's picture

Yeah, all that has been lost is the concept of good judgement.

Mr. Universe's picture

I'm thinking this is where healthcare is headed.

"Don't want to sound like a dick or nothing, but ahh ... says on your chart that you're fucked up. Ahh, you talk like a fag, and your shit's all retarded."

ElTerco's picture

We are already there:

"Hospital Errors are the Third Leading Cause of Death in U.S."

"between 210,000 and 440,000 patients each year who go to the hospital for care suffer some type of preventable harm that contributes to their death"

That's almost an order of magnitude larger than the number of deaths that the self-driving car advocates are supposedly so up in arms about.

WTFUD's picture

All this WINNING is making me dizzy but i'm sure the Powers that be will find a scapegoat in Russia, PRK & Iran for these ills.

Buffett & Blackstone's  trailer parks can cushion the blow and in turn the residents can look down their noses at the Tent Communes. 

headhunt's picture

Well... let's see the top 10% pay over 54% of the taxes.

What is the percentage of wealth in America that is sucked up by people who refuse to work... their entire life.?

What percentage of wealth is sucked into the black hole of people living in the US illegally?

 

ElTerco's picture

Surprisingly small in the grand scheme of things (and even smaller before Obama). That said, the overhead to administer the small net amount they actually get is also surprisingly large.

Sudden Debt's picture

Yeah but it's because they're blessed by god...

 

The only thing that can turn the tide is a war in America that will destroy all the foundations so there can be truely a big reset.

any other reset will only mean a bigger transfer of wealth to the upper classes.

flea's picture

There's really only one foundation that needs to be taken down.

Nationalize the Fed!

rejected's picture

No,,, End the damned thing. It is not needed. I'm sure the Treasury can screw us every bit as good as the FRB.

GreatUncle's picture

Lol the FED CTRL-P but the taxpayer ends up owintg the debt.

Makes sense to nationalize it and audit it too.

Learned one thing in this world you could kill all the globalists but others would pop up to replace them.

So instead chain them i.e  nationalize and legislate the FED in chains with annual audits.

 

GreatUncle's picture

The rate of transferal of debt to the upper classes is a sign of the end game coming.

The rate was slower in decades past but it is accelerating and well above the Keynesian so called stable rate of 2%.

Md4's picture

The only things keeping us clinging to the edge are obscene "values" of crappy shacks (for far fewer able to play that hustle), and 401k's.

Both of which rely on manic participation to rise.

There are many pressures building:

Corporate equity values in the face of actual performance...coupled with growing numbers with paperwork from the big U, and no future...are two big ones.

Then there are, on the other end, pension cuts for millions already constrained in their spending, and forced to keep working in crap gigs the snowflakes don't want...yet.

And so many more still...

Blankfuck's picture

I didnt get any of that FED FUCKER YUM YUM, DID YOU?

css1971's picture

Its also total nonsense.

Musical chairs numbers.

There is only 14 trillion in credit, and 4 Trillions in physical cash.

 

Chupacabra-322's picture

See a lot of Fiat on that graph & not much in the Tangible Asset red area of the graph.

rp2016's picture

$96T stolen from future and all near and dear ones next to me... what is the world total? $200T ... i.e that much has to be stolen back. Hey ZH, do you see a business opportunity?

rejected's picture

The Pentagram has 'misplaced' about 10 trillion dollars.

crickets....

wcvarones's picture

Thanks, Dirty Fed!

Zip_the_Zap's picture

Show me a group of Americans that take moral and ethical responsibility for themselves, and I will show you a balanced budget, low taxation and a less stratisfied society.

GreatUncle's picture

just 10% of the US population is worth $73 trillion

Well at least it is nice to know "they" can afford the current $20T debt to keep it all going.

 

Mikeyyy's picture

Are you kidding?  Those people need a tax cut!  

MrBoompi's picture

You can't have 1 rich person without 1000 poor people.  It's probably always been this way...or worse.  

TeethVillage88s's picture

I want this data.

"And while it would be great news if wealth across all of 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."

https://www.federalreserve.gov/releases/z1/current/z1.pdf
http://www.zerohedge.com/news/2016-08-29/devastating-truth-behind-americ...
https://www.cbo.gov/publication/51846
http://www.zerohedge.com/news/2017-09-21/household-net-worth-hits-record...
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017...
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017...
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016...
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016...
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016...
https://en.wikipedia.org/wiki/Gini_coefficient
http://www.investopedia.com/terms/g/gini-index.asp
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States
https://www.cnbc.com/2017/08/07/the-wealth-gap-in-the-us-is-worse-than-i...
https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States
https://www.census.gov/topics/income-poverty/income-inequality.html
http://www.nytimes.com/topic/subject/income-inequality
http://utip.lbj.utexas.edu/data.html
http://utip.lbj.utexas.edu/papers.html
http://utip.lbj.utexas.edu/links.html
http://utip.lbj.utexas.edu/

TeethVillage, AI

JailBanksters's picture

Debt Bomb, Debt Bomb your my little Debt Bomb

Totally_Disillusioned's picture

they've been looking for the crisis - couldn't get Hillary at the helm to launch WWIII with Russia, China recognized the cost of their tolerating the rocket man and the world has averted WWIII  with Kim, civil unrest in the US hasn't worked...looks like they'll choose the good old fashioned way...let it all implode.