Wealth Report Deeper Dive

by Jay Pestrichelli on December 10th, 2013

Interesting release from the Federal Reserve came out yesterday that reported US households’ net worth reached new all-time highs. This isn’t a data point we regularly hear about so we thought we’d dig into it a little for you.
 
This data point measures the difference between the value of households’ assets and liabilities. At the end of the 3rd quarter this year that number was $773 trillion which was a gain of $1.9 trillion over the 2nd quarter.  MarketWatch.com gives a breakdown of where those gains came from.
This seems like great news, and on a large level it is. However, the article points out that this growth came relatively quickly and is highly concentrated among wealthy households.  Meaning the lower income households that have been most effective by the prolonged market downturn have not participated in the benefits experienced by the wealthy.
 
Fannie Mae put out a release as well brings up other concerns. One of which is that on an inflation basis, this is actually a weaker recovery than previous cycles. If you’re a data junkie like I am, then you may find this analysis fascinating.
 

We’re treating this is an interesting data point, but not one that we believe is going to drive equities any higher. Is it surprising that the agency credited for creating the higher move in stocks with its low interest rate monetary policy is the one putting out a report saying Americans are the wealthiest they’ve ever been?  I’m not a conspiracy theorist, but I have to consider the source on this report. I honestly don’t ever recall this release getting as much publicity before, so I recommend take it for what it’s worth...a report that says that those investing in the stock or housing market are making money. 


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