In The Third Quarter, The Rich Got Richer By $1.9 Trillion
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The quarterly Flow of Funds reportby the Fed has been released and the latest household net worth numbers are out. While not nearly quite as dramatic as last quarter's wholesale dataset revision, which saw all of America suddenly worth $3 trillion more primarily due to a change of how "pension entitlements" (formerly "pension reserves") are calculated (more more in the full breakdown from September), with the resulting total net worth rising to a total of $74.8 trillion, according to the just released data, in the third quarter, US housholds, or rather a very tiny subset of them, saw their net worth rise once again, this time to $77.3 trillion from a revised $75.3 trillion.
The reason for this increase, and why we say a "subset" is because virtually all of the net worth increase was the result of a $1.5 trillion bounce in financial assets (read: capital markets) to a new all time high of $63.9 trillion. As most know by know, the bulk of the exposure to this asset class is held by the ultra wealthy, particularly in the form of Corporate Equities, the category which rose by the single largest amount in the quarter, or $600 billion. Away from financial assets, the remainder, or $500 billion of the increase, was due to a rise in real estate values to $21.6 trillion, still over $3 trillion lower than the all time high for the category reached in Q4 2006.
Curiously enough, the ongoing increase in assets, and thus net worth, continues without any comparable increase in liabilities, as total household debt rose by a minuscule $116 billion, of which the $71 billion increase in consumer credit (read student and car loans) was the biggest offset to net worth growth.
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