The net worth of households and nonprofits improved to a record high in the third quarter of $109.04 trillion from $106.97 trillion, a gain of 1.9%, the Federal Reserve said Thursday.
We are rich !!! Woot Wooot !
I read the article and a couple things jumped out at me
The 1st was the last to be mentioned, which is the 30% give or take of debt. I assume this is corp debt.
In my world, I can remember my earlier yrs of starting my farming career. A 30% debt level was considered good by my banker, so long as I showed a strong cash flow and ability to service the debt. No mention in this article, of who or how many can service the debt although it did say that cash on hand had risen. However, the net cash on hand does not tell us much as that cash could be in a few strong hands with many corp struggling to cash flow. In other words this could be good or not so good as the information does not tell us very much in the way of detail. How many are closing their doors and how many are expanding operations, or simply doing a buy back of stk which I will mention later.. Many people in the Corp world have expressed frustration concerning the tariffs and the uncertainty, plus increased COP which the consumer will have to pay or the building will close their doors. How many of each do we have???
So now we ask?? what happens to those who have increased cash and might increase operations or??? vs. those who have less cash. Granted the net shows increase cash on hand but what does that really mean. Does that mean increased share buy back or??? Instead of increasing operations which may take some time to see a ROI, the obvious and easy way for those in a position to profit is a stk buy back This increases stk value and increases bonuses plus increased option values. This does not benefit those with less than 500 cash in the bank and own no stks. However, perhaps a 401 k would benefit. Not enough info IMHO to make an informed judgement.
The other thing one has to assume is the growing inequality of have and have not. Given the number of people that have less than 500 cash in the bank before the next pay cheque arrives tells me that the stock market is mostly owned by those in the upper echelon of wealth. The clincher as I see it is the rise in consumer debt. It is one thing for consumer debt to increase equal to an increase in wages or some other increase in wealth, but if consumer debt increases more than wages, etc. then a growing segment of the economy [or people if you wish] are simply putting more debt on credit cards, or house hold revolving debt and not paying the entire principal at end of month. This is going down hill for many people who are increasing their consumer debt.
And one has to be aware that those with less than 500 cash in the bank are the largest number of people in the country, but probably own the fewest stks thus do not share in the headline which tells us about how rich we are. Household wealth obviously increased. Did it increase for the wealthy or equally or even anything, for many people. Did stk values have anything to do with a few who increased house hold wealth, by a huge margin out of proportion to all house holds???? Not enough info for a reasonable estimation of the health of the entire country.
The majority of people IMHO did not suddenly share in a sudden spurt of wealth