Median US Household Wealth has Declined by 40% since 2007-2008
Nominal US household wealth it has been declared is at an all-time high. But Marc Faber says that’s mostly an illusion.
Mr. Faber, the author of The Gloom & Doom Report, looked at the relationship between asset prices and US household wealth, and the effect of that relationship on the economy, and reveals the following:
“It seems the wealth of the top 0.1% has vastly improved in recent decades (and the top 10% haven’t done at all badly). But “the median household’s or asset owner’s wealth has declined by close to 40% in real terms (adjusted by the CPI) from its peak in 2007.”
Further, US median household increases in wealth are also illusory because the main component of household wealth is pension fund assets, approximately $22-T, but the fact is that pension under-funding is dire and getting worse.
He also points out that a large portion of household wealth is held in the form of owner-occupied homes. But these assets are, on average, cash-flow negative. This is due to taxes, maintenance costs, mortgage payments, etc.
Further, if your home’s nominal value has appreciated by, let us say, 300% in 30 years, and you now sell and then go to buy a home of similar quality elsewhere, the home you are shopping for will most likely have also appreciated. That wipes out your so-called 300% gainer.
The Top 0.1% of US households own more than the bottom 90%. It’s this ever-growing disparity between the super-wealthy and the average citizen, and its overall impact on the economy, that troubles Marc Faber and many of us a lot.
Have a terrific weekend.