U.S. household wealth increases

The net worth of U.S. households climbed 1.9% in the first quarter of 2014, to $81.8T, with Americans' wealth boosted by rising house prices and the stock market.

Data from the Fed shows the recovery of household wealth, up 11% on a year ago and 43% since the the recession in 2008, as low interest rates push up asset prices.

However, it looks as if inequality has also increased, as most of the gains have gone gone to wealthy households that own stocks and large houses.

Comments (9)
  • King Rat
    , contributor
    Comments (1610) | Send Message
    Of course inequality rose. Any time the economy improves, inequality favors those who save.


    2 employees, Jose and Josie are both single with no kids, make the same salary at the same company for the same job they have worked the for 10 years.
    Jose saves 15% of his salary on top of maxing out his 401(k).
    Josie saves 0% of her salary and does not contribute to her 401(k).


    Jose bought a house last year with 20% down and put $5k each in SPY, DIA, and QQQ.
    Josie rents and refuses to invest in the stock market because it is dangerous. Instead she goes shopping.


    As of December 31, 2013, Jose had $30k in home equity, $30k in index funds, $30k in 401(k), and $10k cash.
    As of December 31, 2013, Josie had a cool new car, and lots of clothes and jewelry she doesn't wear.


    In January both get a 3% raise. Jose's mortgage stayed the same but Josie's rent rose by 3%.


    As of March 31, 2014, Jose had $36k in home equity, $31k in index funds, $31k in 401(k), and $15k cash.
    As of March 31, 2014, Josie got more cool clothes and jewelry, but still no savings.


    So in 3 months, Jose gained $13k total. $6k in home equity, $2k in investments, and $5k in cash from saving money.
    Josie gained $0.


    If this continues for 30 years, Jose will eventually gain more money from dividends than salary and Josie will still be broke. Jose will make more money because he is more disciplined and sacrificed all those cool things that Josie could not resist purchasing.


    Generally the only time inequality falls is when the stock market drops and housing prices drop, but that is due to everybody getting poorer. Is that what we want, for the haves to lose what they have so the have nots can replace envy with schadenfreude?


    Disclaimer: I am currently a renter but I salute home owners.
    6 Jun 2014, 04:14 AM Reply Like
  • TNflash
    , contributor
    Comments (34) | Send Message
    If you have no assets and the market increases 10% you still have no assets.


    If you have $10 in assets and the market increases 10% you have $11.


    In other words, "It takes money to make money".
    6 Jun 2014, 05:13 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3498) | Send Message
    Exactly. Once the kids moved out of the house and I had more cash - my personal wealth grew very quickly. You can't save when essential expenses are even with salary.
    6 Jun 2014, 07:40 AM Reply Like
  • SaltyDog62
    , contributor
    Comments (835) | Send Message
    Josie marries jose, then divorces him. Presto josie is ahead! Gets half without working for it. Life in America, or anywhere else.
    6 Jun 2014, 07:57 AM Reply Like
  • InTheTube
    , contributor
    Comments (185) | Send Message
    Thank you King Rat. Sums it up nicely.
    6 Jun 2014, 07:18 AM Reply Like
  • User 353732
    , contributor
    Comments (5158) | Send Message
    The US now has all the tropes of a kleptocratic oligarchy.
    The ruling doctrine now is that, materially, to those who have more shall be given and to those who have not, what they have shall be taken.
    6 Jun 2014, 07:39 AM Reply Like
  • Archman Investor
    , contributor
    Comments (3316) | Send Message
    Nothing to see here folks. Move along. All deception.


    6 Jun 2014, 07:41 AM Reply Like
  • 26175913
    , contributor
    Comments (15) | Send Message
    Exactly...all deception and made up numbers. Anyone that lives in the real world knows better! The government just wants us to look at the numbers and think...oh, things are improving... and have hope when in truth, day by day the Wall Street thieves and banksters are robbing everyone blind and they want us to be completely and utterly unprepared for what is near!
    6 Jun 2014, 08:27 AM Reply Like
  • InTheTube
    , contributor
    Comments (185) | Send Message
    By the way, you forgot to mention that Josie also takes out a credit card with a low introductory rate of 38.3% APR and maxes it out to 10k in four months.
    10 Jul 2014, 10:32 AM Reply Like
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