Bill McBride — Fed's Q4 Flow of Funds: Household Net Worth at Record High

Let's not blow the trumpets just yet. The wealthy lost a lot of paper wealth in the crisis aftermath and that has bounced back. Lower on the scale, not so much, since most financial equity is held by the wealthy rather than being widely distributed and many home "owners" lower on the scale are still underwater. Inequality of income and wealth distribution has increased since the crisis, shrinking the (formerly) "middle class" households even more than the figures show, since many are only a paycheck away from being poor if they lose their access to credit.

Calculated Risk
Fed's Q4 Flow of Funds: Household Net Worth at Record High
Bill McBride

Household Net Worth declines $2.4 Trillion in Q3 — Calculated Risk

The Federal Reserve released the Q3 2011 Flow of Funds report today: Flow of Funds. 

The Fed estimated that household net worth declined $2.4 trillion in Q3. Household net worth peaked at $66.8 trillion in Q2 2007, and then net worth fell to $50.4 trillion in Q1 2009 (a loss of $16.4 trillion). Household net worth was at $57.4 trillion in Q3 2011 (up $7.0 trillion from the trough, but down $2.4 trillion in Q3).

The Fed estimated that the value of household real estate fell $98 billion to $16.1 trillion in Q3 2011. The value of household real estate has fallen $6.6 trillion from the peak - and is still falling in 2011.

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Q3 Flow of Funds: Household Net Worth declines $2.4 Trillion in Q3

The US economy is limping along to gradually improving owing to government deficits, but housing remains a major drag.

And it looks like it is not over yet.

Assets prices, as a percent of GDP, have fallen significantly and are only slightly above historical levels. However household mortgage debt, as a percent of GDP, is still historically very high, suggesting more deleveraging ahead for households.