Yesterday we reported survey results from Schwab and the WSJ that pegged the threshold for being classified as “rich” or “wealthy” at about $2.5 million.
Just being a millionaire doesn’t make the cut any more.
Source: NY Times
OK, so how many households do make the cut?
According to the Federal Reserve Bank of St. Louis’ 2012 Annual Report …
In nominal terms (i.e. ignoring inflation) aggregate household net worth at the end of 2012 was $66.1 trillion, nearly back to its precrisis peak of $67.4 trillion, reached at the end of the third quarter of 2007.
After falling to $51.4 trillion at the end of the first quarter of 2009, the subsequent increase of $14.7 trillion through the end of last year.
In other words – nominal aggregate household net worth (the blue line) is almost back to where it was before the financial crisis … call it down 3% from the peak.
,
But … there’s way more to the story.
Based on a very rigorous analysis by Robert Wolff of NYU …
Scored in constant 1995 dollars – i.e. eliminating the effects of inflation …
Bottom line: More millionaires … but they have fewer millions.
Source: Wolff, NYU, Asset Price Meltdown and Wealth of the Middle Class
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Interesting analysis by the CBO …
Punch line: When you delate the numbers, i.e. take out inflation effects – household net worth is roughly 5 times disposable income … that’s down from the dot-com and housing booms & busts, but roughly at historical levels.
In other words, the market bubbles were more like sugar-rush outliers … than “new normals”.
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