The Trump Effect at Work: US Household Wealth Tops $100-T

The Trump Effect at Work: US Household Wealth Tops $100-T

The Trump Effect at Work: US Household Wealth Tops $100-T

$DIA, $SPY, $QQQ, $RUTX

US household wealth topped the $100-T mark for the 1st time in Q-1 of Y  2018, the Fed reported late Thursday.

The Fed said the net worth of the nation’s households and nonprofits rose to $100.8-R in the 1st frame of the year, up from $99.7-T in Q-4 of Y 2017.

The rising value of America’s homeowner’s investments has now boosted their net worth by over $6 trillion compared to Q-1 of Y 2017, a frame that overlaps with the 1st year of The Trump Administration.

Wealth has been rising since the United States emerged from the Y’s 2007-09 financial crisis.

Stock prices have risen nearly 40% since President Trump’s election in November 2016, which buoyed optimism among investors in a fiscal expansion that drove company profits North

The value of financial assets held by households rose by $511-B during Q-1, while real estate value rose by $490-B.

Elsewhere in the Fed’s report, liquid assets held by non-financial firms were $2.7-T, up from $2.6-T in Q-4.

The strength of the US economy has prompted the Fed to continue with incremental increases in borrowing costs as part of a tightening cycle it began in late Y 2015.

The figure reflects the value of assets like homes, bank accounts and stocks minus debts like mortgages and credit cards.

Increased wealth will likely boost consumer spending in coming months

Greater household wealth can support faster economic growth. Research has found that in the past, people spent roughly 3-5% of every USD in additional wealth they accumulated.

Highlights of Household Wealth Report (First Quarter)
  • Net worth for households and non-profit groups rose by 1% Q-Q, or $1.03-T, to $100.8-T, according to Fed’s financial accounts report, previously known as flow of funds survey
  • Value of corporate equities declined $290-B after surging $867-B
  • Household debt increased at a 3.3% annual rate after a 4.6% pace at the end of Y 2017
  • Household real-estate assets rose by $432.4-B; owner’s equity as share of total real-estate holdings climbed to 59.7% from 58.9%

Key Takeaway

While steady gains in home prices continued to bolster Americans’ wealth, the decline in stock prices tempered the pace.

The S&P 500 Index shaved off 1.2% last Quarter. The 20-City property values index climbed 6.8% in March from a year ago, matching February for the biggest Y-Y jump since 2014, according to S&P CoreLogic Case-Shiller data.

Rising net worth augurs well for consumers’ purchasing power and will help sustain household spending, the biggest part of the economy. At the same time, household borrowing grew at a slower pace in Q-1 reflecting a smaller advance in mortgage debt.

The report also showed companies had $2.66-T in liquid assets, giving them the means to boost spending, including on investment and hiring, or the ability to buy back shares.

  • Value of financial assets, including stocks and pension fund holdings, increased by $510.6-B to $81.7-T
  • Mortgage borrowing advanced at a 2.9% pace, slower than the 3.4% rate in the prior Quarter
  • Other forms of consumer credit, including auto and student loans, climbed at a 4.2% rate after 6.7% in Q-4
  • Total non-financial debt, which includes businesses and governments, grew at a 7.2% annual pace
  • Federal government obligations expanded 15.3%, state and local government debt dropped at a 4.2% pace
  • Business borrowing increased 4.4% for a 2nd Quarter running.

The Trump Effect: America First & MAGA

Have a terrific weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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