Regardless of what you think about the inequality of wealth and incomes, the fact is that the U.S. economy continues to create an astounding amount of wealth - wealth that benefits us all. Household net worth is at record highs, both in nominal, real, and per capita terms, even as household leverage has declined significantly. It's hard to see what's wrong with this picture.
Here are the charts:
According to the Fed, U.S. households' net worth rose $1.63 trillion in the first quarter of this year, reaching a new, all-time high of $84.9 trillion. Most of the gains have been in financial assets and savings accounts.
After adjusting for inflation, household net worth also reached a new, all-time high, easily eclipsing the last pre-recession high.
After adjusting for inflation and for population growth, real per capita net worth reached a new, all-time high of over $261K. That's 3.3 times as much as it was 50 years ago!
Importantly, the latest surge in wealth was not driven nor sustained by any debt "bubble." As the chart above shows, household leverage has declined significantly since 2008, all the while net worth rose to new all-time highs. Household leverage today is about the same as it was back in 1990.
Even if all this staggering amount of wealth were held by just a handful of people, it would still be the case that we all benefit from it. This wealth is the ultimate source of all jobs and our living standards. Because our economy can produce so much, so efficiently, the fruits of modern life (e.g., iPhones, air travel, clean water, abundant food) are available to virtually everyone.
I reflected on this while visiting some centuries-old castles and estates today, where it took an army of servants to provide a standard of living for the wealthiest of landowners that would be considered below-poverty-level today. No electric light bulbs. No refrigerators. No HVAC. No TV. You get the picture.
The daily life of a billionaire today is not all that much different from that of a median-income wage earner. Both have ready access to great food, a clean abode, cheap travel, cheap entertainment, great health care, and instant communications with just about anyone, anywhere in the world.