Tuesday, July 14, 2009

Household net worth probably up by $3 to $4 trillion in Q2

In the past two years (ending Q1 2009) household net worth took a massive hit--down $14 trillion according to data from the Federal Reserve.

Household net worth (market value) Q2 2007: $64.3 trillion
Household net worth (market value) Q1 2009: $50.4 trillion

The public has experienced the largest wealth decline since the Great Depression.

That's the bad news...

The good news is, household net worth probably recovered by $3 to $4 trillion in the second quarter of this year. The reason is, the bounce back in the stock market, which added about $2 trillion and the greater holdings of Treasuries (an asset) by the public. Treasury holdings of the public have increased almost $2 trillion over the past two years.

We still have a long way to go to get back to $64 trillion, however, the recovery of some household wealth is not a bad thing.

If gov't keeps deficit spending (adding assets to the non-governmental sector) and confidence can be bolstered, we could recover a good portion of what we lost in a fairly short order because we still have all the productive physical and human capital of the nation on hand and ready to go.

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