As of the third quarter, aggregate U.S. household assets (excluding nonprofit organizations) are at the highest level relative to disposable personal income in history. The nearly $123 trillion of assets held by households is up around 3% from a year ago level (before market weakness in the fourth quarter) and represents more than 5 times the amount of aggregate disposable income. While the longest U.S. expansion in history is the most visible reason for these record numbers, the more elementary explanation is the unusually low level of interest rates that the Fed has felt necessary to support this economic cycle with. The question of when this all ends and mean reverts will depend on the timing of the next recession as well as if rising inflation forces the Fed to again start hiking rates. While neither appear imminent, we are clearly closer to the end of this cycle than the beginning.
The chart below can be downloaded here.
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