U.S. Household Net Worth Falls 18%
Not very good: The Federal Reserve reported that “Americans’ net worth fell in 2008, erasing four years of gains, as the value of their houses and stock market portfolios decline, according to new data from the Federal Reserve.”
The specifics ain’t pretty:
• Household assets as a whole fell 15% to $65.7 trillion, unadjusted for inflation.
• Household liabilities a declined less than 1% to $14.2 trillion.
• Net worth for households and non-profit groups decreased $5.1 trillion in Q4 2008;
• Real-estate-related household assets declined by $937.1 billion;
• Net worth of American households (difference between assets and liability) was $51.5 trillion, down $11.2 trillion or nearly 18% from 2007.
• Americans’ total wealth is now back to levels prior to 2004.
• Mortgage credit fell to $10.5 trillion, the first decline since the Fed started keeping track in the 1950s.
• Non Mortgage consumer credit rose nearly 2% to $2.6 trillion.
• Household debt increased by 0.5% , 6.25 percentage points less than the 2007 increase.
• Americans’ homeowners’ equity as percentage of the value of their homes fell to 43% in 2008. (Includes both homeowners with mortgages and those who have paid their mortgages off.)
• Americans’ stock market holdings — both direct holdings, mutual funds and retirement plans — fell to $12.1 trillion a year-end 2008 from $20.6 trillion the year before, the lowest level since 1997.
• Total bank deposits rose nearly 5% to $7.7 trillion in 2008.
Makes me think of those Capital One ads: What do you have in your wallet ?
Answer: A lot less than last year . . .
>
Sources:
Q4 2008 Flow of Funds.
Federal Reserve, March 12, 2009
http://www.federalreserve.gov/releases/z1/current/default.htm
See also:
The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble
David Rosnick and Dean Baker
CEPR February 2009
http://www.cepr.net/documents/publications/baby-boomer-wealth-2009-02.pdf
U.S. Household Net Worth Tumbled Last Year
S. MITRA KALITA
MARCH 12, 2009, 5:05 P.M.
http://online.wsj.com/article/SB123687371369308675.html
March 12th, 2009 at 8:24 pm
My Net Worth has increased 50%…am I doing good ?
March 12th, 2009 at 8:47 pm
km4:
Be more specific – post all of your financial information, including account numbers, and I’ll get back to you.
March 12th, 2009 at 8:58 pm
km4:
Me too. Thanks to blogs like this (e.g. Mish, CalculatedRisk, Roubini, NakedCapt.) that I started reading 26 month ago and as a result, I saw opportunity and “shorted” first HomeBuilders, then Banks and now I am short on discrecianary spending. My last two years result has almost doubled my net worth.
I am not bragging, my point is that access to accurate data/analysis were the reason, otherwise I am not very smart in investing. Good Luck to all.
March 12th, 2009 at 9:20 pm
“is that access to accurate data/analysis were the reason, otherwise I am not very smart in investing.”
holulu,
join the club..
IOW, w/o such, who would be? remember, Carnac was a performance artist..
http://en.wikipedia.org/wiki/Carnac_the_Magnificent
March 12th, 2009 at 9:21 pm
Thank God my wages have increased since 2001, right? Right? Riiiiggghhhhtttt?????
March 12th, 2009 at 9:47 pm
Hi fellas…I do want you to know that I’m not doing as well as Nouriel Roubini who Copters His Way Back Home with babes….
Who’s the most popular guy in the midst of the worst economic crisis in decades? Why, none other than Nouriel Roubini, New York University’s own Dr. Doom. He just got back from a world tour.
Roubini, a doomsaying economist who’s as well-known for his Tribeca loft parties as his increasingly grandiose predictions of worldwide economic collapse, took a break from wooing young women on Facebook to post a few photos of a copter ride in Brazil.
http://valleywag.gawker.com/5169150/nouriel-roubini-copters-his-way-back-home
March 12th, 2009 at 10:18 pm
Capital One….a financial corporations that seems a bit unscathed…makes me wonder. Their ads over the past few years have struck me as desperately delusional.
March 12th, 2009 at 10:22 pm
There’s something about these charts that is very troubling. There are dozens of them, and almost all of them show a pronounced upward deviation from normal starting in about 1982-83. (That coincides roughly with the end of the Volcker era at the FED and the high-interest rate regime he implemented.) Suddenly, the charts start moving upwards at a degree that doesn’t seem to be substantiated by the underlying strength. From a structural standpoint, not a way to build something permanent.
Of late there’s been quite the comparison between the US over the past 14 months, and Japan from about 1989 to the present. Some have even hoped, it seems to me, that we can make do as well as Japan.
This seems to me to be not much of a hope. Japan has been in a decline for the past 19 years, and they could export their goods to the US and the rest of the world. The US, on the other hand, has been the ‘host’ here, buying goods from Japan (and China and everywhere else), and putting it all on a credit card, so to speak.
Japan started this decline in ‘89 with a surplus of savings, has a very homogeneous population, and a tradition of helping others in need. The US started out in debt, and is about as opposite a country as can be imagined from Japan in other ways. Let us all hope that the “humanity” gene is dominant.
For if we have already lost $11.2 trillion, and if the long-term trend is restored, then there could be _at least_ another $30 to 35 trillion lost before the trend is reached, and maybe more if it overshoots the trend line.
There is no doubt in my mind that the trend will restore itself if left to its own devices. It may be that this is the right thing to do. But there will be so much agony in the meantime that I doubt that the population will permit it to happen.
So we should begin to examine how we want to build this new old world we are entering, and be prepared to spend as much as necessary to construct it, so that when it is built, we will have something that will work for us for a long time in the future.
March 12th, 2009 at 11:04 pm
Breaking News:
China’s premier says he is concerned about the safety of U.S. assets held by China.
Follow me here as well: https://twitter.com/BostonWealthMan
March 12th, 2009 at 11:19 pm
Are the charts log or arithmetic charts for the upturn since 1982? Non log charts can be deceptive, minimizing early returns.
There has been much made of how household debt exceeds household income. But isn’t the first item a balance sheet item and the second an income statement item? Should the two be compared? Or should it be debt to equity and debt service to income? How are those numbers doing long term?
March 12th, 2009 at 11:24 pm
Off topic, but for all the haters that said Stewart would go soft on Cramer, think again. He is eviscerating him.
Well played Mr. Stewart
March 12th, 2009 at 11:30 pm
Just watched The Daily Show with Cramer. Well done by Stewart and I have to say, Cramer. I give Cramer a lot of credit for facing the music and finally owning up to some of he and CNBC’s shortcomings. Pretty sad that it takes a comedy show for this to happen but it’s a positive development nonetheless.
March 12th, 2009 at 11:42 pm
@Trainwreck,
You should define “seems a bit unscathed” when discussing Capital One.
That balance sheet has been decimated, they are in trouble, and not to mention to stock is down 80% or so from the peak.
March 12th, 2009 at 11:48 pm
long-term, there are actually some encouraging things about some of these numbers.
March 12th, 2009 at 11:57 pm
Of course individual results are all over the map, and certainly some people have done well in the market these past few years. But touting bearish blogs as the source of wealth is hard for me to swallow. The reason being that most of the real bears, whose warnings have proven correct, were WAY early in their bearishness. Like YEARS early. Lots of money was lost by following their advice before Oct’07.
March 13th, 2009 at 12:17 am
I pray Jon Stewart does not let up on CNBC until they are driven into the ground. Perhaps when that happens Rick Santelli can offer jobs to what is left of the Staff of CNBC as he goes on the road to promote his winners over the losers idea.
March 13th, 2009 at 12:22 am
“@Trainwreck,
You should define “seems a bit unscathed” when discussing Capital One.
That balance sheet has been decimated, they are in trouble, and not to mention to stock is down 80% or so from the peak.”
Aware of that, but why are they still around? Yeah they cut their dividend by 80% or so…. Next target for the Zeroes?
March 13th, 2009 at 12:30 am
Clem Stone Says:
as used to be said in the Journalism business: “Names names.”
w/this: “Lots of money was lost by following their advice before Oct’07.”
it’s simple, give an example, or three..
March 13th, 2009 at 3:25 am
@Hoffer
Clem Stone is right in that many of the bears including BR predicted the market collapse but the markets held on longer than they anticipated- obviously if you were long you could have made money all the way to the top of the market and then go short- however isn’t that what everyone wants. It’s always easier looking back on it all.
March 13th, 2009 at 7:05 am
Jon Stewart has more integrity and investigative ability (certainly not more resources) than any “news person” currently on the air. That he makes his living as a comedian is a bonus. There was nothing funny about the showdown. The audience was very quiet. His parting comment to the viewers that he hoped watching the interview was less uncomfortable than conducting it, was telling. Moderators of Meet the Press and Face the Nation should study what Stewart did in this interview, and how he did it. The man has a spine.
Stewart should start issuing challenges to public officials.
March 13th, 2009 at 7:07 am
One out of five vehicles financed in February 2009 included debt rolled over from a previous vehicle, according to vehicle research site Edmunds.com, and the average amount of so-called “negative equity” was $4,676.
The typical 3-year-old car is worth $2,250 less than a similarly aged vehicle last year, Clark said, while the values of SUVs and big trucks have tumbled even more. A 3-year-old Toyota Tundra last year would have been worth nearly 60% of its original sticker price, but that resale value has since fallen to 40% for a 2006 version.
http://articles.moneycentral.msn.com/Insurance/InsureYourCar/CloseTheGapInYourCarInsurance.aspx
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Is this car wreck being tracked and captured in declining household net worth. The gap between the loan amount and underlying value of the second largest household purchase has widened in the past year along with housing.
March 13th, 2009 at 8:04 am
Another WSJ ed page alibi down the toilet……All those years of editorials telling us it didn’t matter that real incomes for 80% of the country were stagnant or shrinking because after all household net worth was increasing by leaps and bounds…..When Stewart has done with CNBC he should start on the WSJ ed page…It’s even more hilarious.
March 13th, 2009 at 10:39 am
@Hoffer
The name that immediately jumps to mind is “Fleckenstein.” And it should be said up front that he specifically tells his readers that his comments are NOT to be construed as investment advice. But let’s be realistic….it’s clear that many of his readers place bets based on his comments.
It’s well-known that gold (and gold stocks) have not done what the gold bugs believed it would do if the S&P went down 50%. Four months ago NEM was down 70% from its ‘06 high!
Housing was clearly in a bubble at least as far back as ‘03. But housing stock bears got hammered over and over again from ‘03-’06 as the stocks kept rocketing.
Fleck was warning about Fannie May since at least early in this decade, yet it wasn’t until Oct’07 that it finally broke. By the time it (and dozens of other financials) broke, the shorts had taken such a beating that there’s no way that more than a tiny fraction of the bears had the conviction to ride these things all the way down.
Tech stocks…same story. I can’t remember how many times i heard warnings about Intel going to single digits, only to then watch it go from 20 to 30.
I’m not really blaming anyone for bad advice, i’m just claiming that it was impossible to know which bearish advice to follow and when to follow it. It’s very easy in retrospect to say the bears were right, but trying to make money on their advice was/is a whole different matter. I’m not really interested in analyzing markets as a philosophical exercise. The entire reason i do this is to make money, and the one thing i know for sure is that it takes way more than a cogent philosophy.
March 13th, 2009 at 1:46 pm
Clem,
thanks for fleshing that out, I hear ya. The ‘Realists’ are, often, too early (:
though it does delineate the difference in ‘Asset Classes’, there were ‘Bears’ suggesting that “Paper” was out, and “Things” were in c. 2000.
the boys at http://www.lemetropolecafe.com and http://www.financialsense.com come, readily, to mind..
though, the “Market”, as always, is a Wild Beast, maybe to be ridden, never tamed..