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Total Household Net Worth As A Percent Of GDP 1Q 2011

Friday, June 10th, 2011

The following chart is from the CalculatedRisk blog post of June 9, 2011, titled “Q1 Flow of Funds:  Household Real Estate assets off $6.6 trillion from peak.” It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from The Federal Reserve Flow of Funds 1Q 2011 report:

(click on chart to enlarge image)

As seen in the above-referenced CalculatedRisk blog post:

The Fed estimated that the value of household real estate fell $339 billion in Q1 to $16.1 trillion in Q1 2011, from just under $16.5 trillion in Q4 2010. The value of household real estate has fallen $6.6 trillion from the peak – and is still falling in 2011.

Household net worth peaked at $65.8 trillion in Q2 2007. Net worth fell to $49.4 trillion in Q1 2009 (a loss of over $16 trillion), and net worth was at $58.1 trillion in Q1 2011 (up $8.7 trillion from the trough).

My comments:

As I have written in previous posts on this topic:

“As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

As seen on the chart, the Total Household Net Worth is making an upturn, but is significantly below the prior 2007 peak.

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.”

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1289 as this post is written

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Total Household Net Worth As A Percent Of GDP 4Q 2010

Friday, March 11th, 2011

The following chart is from the CalculatedRisk blog post of March 10, 2011.  It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from The Federal Reserve Flow of Funds 4Q 2010 report:

(click on chart to enlarge image)

As seen in the above-referenced CalculatedRisk blog post:

“According to the Fed, household net worth is now off $8.8 Trillion from the peak in 2007, but up $8.1 trillion from the trough in Q1 2009.

Update: Household net worked peaked at $65.7 trillion in Q2 2007. Net worth fell to $48.7 trillion in Q1 2009 (a loss of almost $17 trillion), and net worth was at $56.8 trillion in Q4 2010 (up $8.1 trillion from the trough).

The Fed estimated that the value of household real estate fell $260 billion to $16.37 trillion in Q4 2010. The value of household real estate has fallen $6.3 trillion from the peak – and is still falling in 2011.”

My comments:

As I have written in previous posts on this topic:

“As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

As seen on the chart, the Total Household Net Worth is making an upturn, but is significantly below the prior 2007 peak.

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.”

-

A Special Note concerning our economic situation is found here

SPX at 1295.11 as this post is written

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The “Safety Net” – A Few Comments

Tuesday, January 4th, 2011

On December 14, The Wall Street Journal had a story titled “Fewer Homes ‘Underwater’ as Foreclosures Increase.”

In the article, I found a quote by Matt Dobler as especially notable:  “It just kind of leaves you wondering what the safety net is for my generation, because it’s obviously not our home.”

Although I typically don’t mention the term “safety net,” I do believe the concept deserves contemplation, especially given our current economic situation.

There are various definitions of “safety net”;  perhaps the most straightforward is “anything that provides security against adversity or misfortune.”

Is the “safety net” growing or shrinking?  Is it getting higher or lower?  What can one do to insure against financial adversity?  To what extent should/can the government create a “safety net”?

The concept is particularly relevant now, as it seems as if an increasing number of people are experiencing hardship and adverse economic volatility.

Measuring, as well as predicting, trends in people’s changing economic fortunes is difficult.  One effort that has been made is the creation of the “Economic Security Index” that I discussed in the August 6 post.

Recent research related to this “Economic Security Index” is seen in a December report titled “Standing On Shaky Ground” (pdf), subtitled “Americans’ Experiences With Economic Insecurity.”  An excerpt from page 3:

“As suggested by the title of this report, many Americans are—and see
themselves to be—standing on shaky ground. The recent economic downturn represented an especially powerful quake, emanating from two distinctive epicenters: declining employment and disrupted financial markets. Yet Americans faced jarring economic shocks even before the downturn, and continue to do so today. The SERPI and related evidence suggest that economic insecurity has become the rule, not the exception, for many Americans—even in good times.”

I’ll likely comment further on the topics of the “safety net” and “economic security” in future posts…

A Special Note concerning our economic situation is found here

SPX at 1271.89 as this post is written

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Total Household Net Worth As A Percent Of GDP 3Q 2010

Friday, December 10th, 2010

The following chart is from the CalculatedRisk Blog of December 9, 2010.  It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from The Federal Reserve Flow of Funds 3Q 2010 report:

(click on chart to enlarge image)

As seen in the above-referenced CalculatedRisk blog post:

“According to the Fed, household net worth is now off $11 Trillion from the peak in 2007, but up $5.8 trillion from the trough in Q1 2009.

The Fed estimated that the value of household real estate fell $684 billion to $16.55 trillion in Q3 2010, from $17.2 trillion in Q2 2010.”

My comments:

As I have written in previous posts on this topic:

“As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

As seen on the chart, the Total Household Net Worth is making an upturn, but is significantly below the prior 2007 peak.

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.”

-

A Special Note concerning our economic situation is found here

SPX at 1233.00 as this post is written

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Total Household Net Worth As A Percent Of GDP 2Q 2010

Tuesday, September 21st, 2010

The following chart is from the CalculatedRisk Blog of September 18, 2010.  It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from The Federal Reserve Flow of Funds 2Q 2010 report:

(click on chart to enlarge image)

As seen in the above-referenced CalculatedRisk blog post:

“According to the Fed, household net worth is now off $12.3 Trillion from the peak in 2007, but up $4.7 trillion from the trough in Q1 2009.”

My comments:

As I wrote in the previous (June 17) post on this topic:

“As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

As seen on the chart, the Total Household Net Worth is making an upturn, but is significantly below the prior 2007 peak.

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.”

A Special Note concerning our economic situation is found here

SPX at 1141.45 as this post is written

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4 Confidence Charts

Friday, July 23rd, 2010

Here are four charts reflecting confidence survey readings.  These are from the SentimenTrader.com site.

I find these charts valuable as they provide a long-term history of each survey, which is rare.

Each survey chart is plotted in blue, below the S&P500:

(click on each chart to enlarge image)

Conference Board Consumer Confidence, last updated 6-29-10:

University of Michigan Consumer Confidence, last updated 7-16-10:

ABC News Consumer Comfort Index, last updated 7-8-10:


NFIB Small Business Optimism, last updated 7-15-10:

As one can see, these charts continue to show subdued readings, especially when viewed from a long-term perspective.

These charts should be interesting to monitor going forward.  Although I don’t believe that confidence surveys should be overemphasized, they do help to delineate how the economic environment is being perceived.

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SPX at 1094.59 as this post is written



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Total Household Net Worth As Percent Of GDP 1Q 2010

Thursday, June 17th, 2010

The following chart is from the CalculatedRisk Blog of June 10, 2010.  It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from The Federal Reserve Flow of Funds 1Q2010 report:

click on chart to enlarge image

As seen in the above-referenced CalculatedRisk blog post:

“According to the Fed, household net worth is now off $11.4 Trillion from the peak in 2007, but up $6.3 trillion from the trough in Q1 2009. A majority of the decline in net worth is from real estate assets with a loss of about $6.4 trillion in value from the peak. Stock market losses are still substantial too.”

My comments:

As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

As seen on the chart, the Total Household Net Worth is making an upturn, but is significantly below the prior 2007 peak.

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.

back to <home>

SPX at 1114.73 as this post is written

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Rising Costs And Inflation

Thursday, May 6th, 2010

“And long before this recession hit — for a decade — middle-class families had already been expensing — experiencing a sense of declining economic security.  Their paychecks were flat-lining even though the cost of everything from groceries to college educations to health care were all going up.”

President Obama, during an April 2, 2010 speech

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Although the CPI and various other cost and inflation indices have been relatively subdued for many years, it is inarguable that many costs routinely experienced by the average American have dramatically increased.  Perhaps the main resultant effect of these cost increases are for the average citizen to (continually) experience a declining standard of living.

Over the last few months, many costs have been rising sharply.  These cost increases are most pronounced among many commodities, as discussed in this April 23 Wall Street Journal article “High Cost of Raw Materials.”

These pervasive cost increases are also impacting many businesses in pronounced ways.  I will be discussing this in a subsequent post as these impacts are little understood, yet will likely have large future effects.

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SPX at 1162.89 as this post is written

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Four Confidence Survey Charts

Thursday, April 29th, 2010

Here are four charts reflecting confidence from the SentimenTrader.com site.  They provide a longer-term historical timeframe, which I have found to be rare.

Here are the charts.  Each is plotted vs. the S&P500:

Conference Board Consumer Confidence, last updated 4/27/10:

University of Michigan Consumer Confidence, last updated 4/16/10:

ABC News Consumer Comfort Index, last updated 4/16/10:

NFIB Small Business Optimism, last updated 4/16/10:

The above NFIB chart is particularly useful in conjunction with the April 15 post that discussed the latest NFIB results.

The four above charts certainly seem to indicate that “this time is different” – at least from the perspective of “confidence.”

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SPX at 1205.20 as this post is written

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America’s Economic Future

Monday, February 15th, 2010

As a follow-up to yesterday’s post, here is a passage from Larry Summers’ March 13, 2009 speech that speaks of the importance of economic strength in achieving broader societal goals:

“Our single most important priority is bringing about economic recovery and ensuring that the next economic expansion, unlike it’s predecessors, is fundamentally sound and not driven by financial excess.
This is essential. Without robust and sustained economic expansion, we will not achieve any other national goal. We will not be able to project strength globally or reduce poverty locally. We will not be able to expand access to higher education or affordable health care. We will not be able to raise incomes for middle class families or create opportunities for new small businesses to thrive.”

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Our national goal to achieve a sustainable recovery (or what I frequently refer to as “Sustainable Prosperity”) has been and will continue to be a challenge, given various underlying fundamentals.

In order to achieve “Sustainable Prosperity” we will need to have a solid focus on planning our economic future and its dynamics.  Toward this end, I wrote an article in May of last year titled “America’s Economic Future – ‘Greenfield’ or ‘Brownfield’?” which can be found listed along the right-hand side of the home page.  That article, as well as others I have written, explores some of what I believe are pivotal issues that lack recognition with regard to our economic future.

All of my articles are also listed and summarized at this link:

http://www.economicgreenfield.com/prosperitybypencom-directory/

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SPX at 1075.51 as this post is written

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