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Equity Wealth and Consumption

Summary:
Figure 1: Household equity wealth, in billions dollars (blue, left log scale), and estimated based on Russell 5000 (blue triangle at 2020Q1), and consumption, in billions Ch.2012$ SAAR (red, right log scale). Source: Fed Flow of Funds, via FRED, BEA 2019Q4 2nd release, and author’s calculations. Note that scales are in logs. The picture looks a lot worse in levels. On the other hand, equities net worth is only about 18% of total net worth in 2019Q4.

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Figure 1: Household equity wealth, in billions dollars (blue, left log scale), and estimated based on Russell 5000 (blue triangle at 2020Q1), and consumption, in billions Ch.2012$ SAAR (red, right log scale). Source: Fed Flow of Funds, via FRED, BEA 2019Q4 2nd release, and author’s calculations.

Note that scales are in logs. The picture looks a lot worse in levels.

On the other hand, equities net worth is only about 18% of total net worth in 2019Q4.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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