Household Net Worth: The Real Story
Doug Short | Mar 11, 2014 03:07PM ET
Note from dshort: With last week's release of the Federal Reserve's Z.1. Financial Accounts of the United States for Q4 2013, I have updated this commentary to incorporate the latest data.
Let's take a long-term view of household net worth from the latest Z.1 release. A quick glance at the complete data series shows a distinct bubble in net worth that peaked in Q4 2007 with a trough in Q1 2009, the same quarter the stock market bottomed. The latest Fed balance sheet shows a total net worth that is 45.2% above the 2009 trough at a new all-time high 17.8% above the 2007 peak. The nominal Q4 net worth is up 3.8% from the previous quarter and up 13.8% year over year.
Note: I've referred to this data series as "household" net worth. But, as I show in the chart titles, it also includes the net worth of nonprofit organizations. The ratio of two isn't clearly defined in the Fed data, and it obviously varies by asset and liability component. I've seen estimates that the nonprofit component is around six percent of the total net worth.
One easy (and rather illuminating) point of comparison in the Z.1 data is the relative share of real estate at market value (B.100 lines 3, 4, and 5). In the latest report, nonprofit organizations account for 6.3% of combined household and nonprofit real estate (unchanged from last quarter). That percentage in the quarterly data has ranged from a high of 9.2% in Q4 1974 to a low of 4.5% in Q3 1996.
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