Americans Are Richer Than Ever

Americans Are Richer Than Ever
Paul Allison, CFA

about 2 months ago1 min

The US government might be neck-deep in debt, but Americans themselves appear to be doing alright. That’s the encouraging takeaway from this chart from investment bank Goldman Sachs. Have a look at the dark blue line: it adds together the average US household’s stock investments (darker blue shaded area), home equity (gray shaded area), and other assets (light blue), then shaves off what that household owes (red), to show its average net worth, compared to disposable income. And with the value of those assets at close to eight times the income, you’re looking at an almost record high. The diagonal lines at the far right show Goldman’s forecasts for each category.

The obvious conclusion here is that, even after a couple of very challenging years, shoppers are entering 2024 in great shape – and that should bode well for the US economy. But there’s a less obvious point to make, and it’s more cautionary. See, equity assets (that’s stocks) have contributed the most to net wealth since 2010 – not surprising, since stock ownership is at record highs. Now that’s a good thing if stock markets continue to do what they’ve been doing – i.e., going up. But after such a strong run in 2023, it wouldn’t be a massive surprise if markets were to take a breather or even dip in 2024. And if that happens, Americans will feel their wealth suddenly diminish.

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