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).
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