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More on Family Net Wealth at an all time high

Posted By Barry Ritholtz On March 10, 2004 @ 11:57 am In Finance | Comments Disabled

In our prior discussion [1] of Family Net Wealth being at an all time high, we challenged the significance of that assertion within the framework of ultra low interest rates.

Now, a reader sends in this graphic from the prolific offices of Ned Davis Research: [2]

Falling Household Compensation/Rising Household Debt
click for larger chart
household_comp_debt [3]
Obviously, net wealth — as a function of home ownership/low interest rates — takes on a very different light when considering Total Household Compensation as a % of GDP, and Household Debt as a % of net worth . . .

Household Compensation is at a 38 year low relative to GDP. That’s back to levels not seen since 1966. Household Debt as a % of net worth is simply off the hook. Its at the highest its been in the post War period (that’s post WWII). There were modest improvements from 1980-84, and from 1994 – 2000. Since then, its been nearly vertical.

By the way, I just started reading Ned Davis’ book, “The Triumph of Contrarian Investing : Crowds, Manias, and Beating the Market by Going Against the Grain [4]” — its very good, and has an excellent overview on the entire subject.


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/03/more-on-family-net-wealth-at-an-all-time-high/

URLs in this post:

[1] prior discussion: http://bigpicture.typepad.com/comments/2004/03/kc_post_mortem.html

[2] Ned Davis Research:: http://www.ndr.com/clients/index.jsp

[3] Image: http://bigpicture.typepad.com/comments/household_comp_debt.html

[4] The Triumph of Contrarian Investing : Crowds, Manias, and Beating the Market by Going Against the Grain: http://www.amazon.com/exec/obidos/tg/detail/-/007143240X/ref=ase_thebigpictu09-20/102-4529470-0078540?v=glance&s=books

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