Buffett, Gates and Zuckerberg’s Net Worth Reaches Record $92.8 Trillion
At least that's what the headline should have been.
I had a good laugh at this one.
U.S. household net worth climbed to a record $92.8 trillion in the fourth quarter of 2016, as the end-of-year surge in stocks and a steady climb in home prices added more than $2 trillion of wealth to household balance sheets.
The biggest contributor to the increase was the stock market, which added $728 billion to household balance sheets in the fourth quarter, according to the Federal Reserve's quarterly financial accounts report.U.S. households lost nearly $13 trillion during the 2007-09 recession. Since the first quarter of 2009, however, wealth has soared by $38 trillion, driven by an eight-year rally in stocks and eventually by a robust recovery in home prices.
With that in mind, here is the key.
The propensity of families to spend more and stop socking money away, known as a "wealth effect," however, has been less pronounced in recent years than during the stock and housing bubbles.
Well, you can thank Yellen, Bernanke, Greenspan and Obama for that. Only the top 1% (maybe 5%) benefited from the recent recovery. Everyone else is suffering as a result.
The worst part is, the wealth effect above is temporary at best. Once the stock market and real estate bubbles collapse, again, we will see net worth levels of average Americans sink to unimaginable levels.
It might be time to stockpile ammo.