Torsten Slok presents this chart and writes: “Ultimately, the tailwind to consumer spending by owners and shareholders is significant, especially when combined with record cash flows from fixed income.”
Source: Torsten Slok/Apollo, July 19, 2024.
This got me wondering whether we saw spikes in the NBER in quarters when household net worth increased. The household net worth series is relatively short, so I use household and nonprofit net worth, deflated by the consumption deflator.
Figure 1: Real net worth of households and nonprofits, logarithms normalized to the NBER business cycle peak. The latest cycle (in bold and black) assumes a peak in Q1 2024. Source: Fed Flow of Funds, BEA via FRED, NBER, and author’s calculations.
In the previous five recessions, real household net worth declined to the NBER peak four times. The only exception was the pandemic-related recession of 2020. In contrast, in the first quarter of 2024, real net worth increased by 10% (q/q AR).
