‘Americans’ $40 Trillion Richer Since Pandemic, Fed Imagines

American “households” became $5.3 trillion richer during the final three months of 2021 (figure below), Fed data out Thursday suggested.

You’ll note the scare quotes around “households.” Regular readers know my take on this data. It hasn’t changed, nor will it until the distribution of financial assets changes and until nearly all Americans realize the dream of homeownership.

So, in other words, never — my assessment will never change, because equities will always be concentrated in the hands of the richest Americans. And, although a sizable percentage of the country does own a home, a sizable percentage doesn’t. Unfortunately, the pandemic boom in property prices put buying further out of reach for many renters, who face the extremely daunting prospect of conjuring $80,000 in order to make a decent downpayment on the median new home.

Given the skewed distribution of stock ownership and the fact that buying a home remains an aspiration not a reality for many Americans, “households” is always a misnomer. It suggests stock and home ownership are universal, or at least common, when in fact, most people simply don’t have much in the way of assets. The aggregate numbers are misleading to the point of absurdity.

Nevertheless, if it’s eye candy you’re after, the updated figure (below) shows the net gain from Q2 2020 through Q4 2021 came to nearly $40 trillion. With Q4’s gain, total net worth rose above $150 trillion for the first time.

Expect to see tweets from financial media personalities proclaiming “Americans got $40 trillion richer since COVID!” Just don’t read the fine print where it says anyone who doesn’t own stocks or property is excluded from the bonanza.

After a $289 billion decline in Q3, the value of corporate equities rose more than $2.5 trillion in Q4. That brought the gain since the pandemic crash to an astounding $23 trillion (figure below).

Again, you’ll note that equities are overwhelmingly concentrated in the hands of the top 10% and, increasingly, the top 1%. So, while you may think your gains count as a “windfall,” remember that’s an extremely relative term.

I’ll recycle the language I always use when documenting these figures because frankly, I’ve refined it to perfection.

The vast majority of people on the planet have no assets. Many “households” own nothing at all to speak of. In America, the richest nation in the history of the world, the richest own virtually all the stocks (figure below). Homeownership is a privilege, not a right, and thanks to the inexorable rise of house prices and the attendant encroachment of investors on the market, it’s becoming a pipe dream for countless first-time buyers.

Simply put: If you own stocks and a home, you’re the exception, not the rule. Certainly in the global context, but in the US context too, with the caveat that owning some stocks is commonplace and homeownership isn’t “rare,” per se.

As bleak (and blunt) as this sounds, the fact is that most people don’t have anything. If you do (have things), you’re an anomaly. In fact, if you’re a sentient being who’s able to live your life largely free of suffering, you’re an anomaly.

Don’t forget that.