The Fed released its quarterly Flow of Funds (Z.1) report Thursday. Although the data is always somewhat stale (Q3 was released today), I find the Flow of Funds an interesting and informative read (how sad is that? Note to self: Get a life.). That said, here are some nuggets I think are of interest (all data from Table B.100):
Household net worth rose to $54.9T, up $1.2T for the quarter but still down $10.8T from the $65.7T peak hit in the second quarter of 2007. Corporate Equities rose by over $900B, and Mutual Funds by almost $400B, while Real Estate declined by about $650B. All in, though, higher is better than lower (as always, click for larger charts):
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Liabilities as a share of disposable income continue to decline — now at 122%, down from 135%. I suspect this will remain below the trend line for quite some time, and it speaks to the ongoing deleveraging.
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Owners’ equity as a percent of household real estate hooked down. It took decades (trust me on this one) for this metric to go from about 80% to around 60%, where it hovered for quite some time (1992 – 2005). All that changed in a few short, bubbly years, and we got down to what was hopefully a low at about 36%. As Josh Rosner so perfectly put it (in 2001 no less): A Home Without Equity is Just a Rental with Debt.
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Last, but not least, a look at the changes over time in some — stress “some” — of the financial assets on the household balance sheet: Deposits (Line 9), Credit Market Instruments (Line 14), Corporate Equities (Line 24), and Mutual Funds (Line 25). I do not know the composition of the mutual funds (i.e. stocks, bonds, commodities, whatever). I called Helicpoter Ben’s office today but no one got back to me, so take that category with a grain of salt. This is essentially a time-series-view of the stocks/bonds/cash pie chart (with the unknown being the composition of the Mutual Funds category).
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I’ll be crunching the numbers in this report a bit more, but don’t expect to find anything dramatic, as happened quarter after quarter during the recession. Will revisit this report when it next prints on March 10, 2011.
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