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Net worth jumps again

March 12, 2021

Graph depicting changes in household net worth in the first three quarters of bull markets

Source: Federal Reserve Board of Governors

Household net worth surged again in the final three months of 2020, rising by 5.6 percent to $130.2 trillion. Corporate equity holdings led the way with a jump of 14.1 percent while real estate assets moved up by 2.6 percent. Net worth is now up by 16.8 percent since last March, by far the strongest three-quarter rise in the history of the series. In fact, the gain over all of 2020 – incorporating the deep bear market in the late winter and early spring – was still a solid 10.1 percent, well above the historical norm.

These numbers point to a growing wealth effect at a time when consumption is already being buoyed by the fading pandemic, economic reopening, a rapidly improving labor market, and aggressive monetary and fiscal stimulus. Rising net worth also feeds directly into a more euphoric zeitgeist that in turn further boosts spending and draws more retail investors into the financial markets. The parallels to the 1990s continue to build and the balance of risks, both for the economy and the markets, continues to move ever more decisively to the upside.

Daily Trivia

What term was coined by the Los Angeles Times in 1990 to describe the increasingly pervasive “fast food ethic” in new home construction?

Previous Question

What country opened its first stock market in the summer of 2000, just one week after signing a landmark trade deal with the U.S.?

Answer:

Vietnam

Sources

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