Relevant and even prescient commentary on news, politics and the economy.

Q4 2010 Flow of Funds: Household leverage down, wealth effect dead, and equities surge

The Federal Reserve released the Q4 2010 Flow of Funds Accounts for the US. On the household balance sheet, net worth (total assets minus total liabilities) was estimated at $56.8 trillion, which is up $2.1 trillion over the quarter. Notably, household net worth has increased $6.4 trillion since the recession’s end (Q2 2009). Moreover, personal […]

Private-sector leverage says that it’s not Bill Clinton

What’s your answer? “Thinking about the past few decades… to the best of your knowledge, which ONE of the following U.S. Presidents do you think did the best job of managing the economy?” Bill Clinton Ronald Reagan Barack Obama Lyndon B. Johnson George W. Bush Richard Nixon That’s question #11 of the the Allstate-National Journal […]

Household leverage: what does the US have that the UK does not?

Earlier this week I compared household saving rates across the US, UK, Canada, and Germany. My conclusion was pretty simple: So generally, this simple analysis would suggest that Menzie Chinn’s skepticism of a “status quo” of US consumer imports is worthy. But with the status quo firmly in place in Germany, the household saving data […]

The answer is the domestic private sector

Jim Hamilton used the Federal Reserve Flow of Funds data to present a question: who will buy “the additional $8 trillion in net new debt that would be issued over the next decade under the CBO’s alternative fiscal scenario.” I thought that the analysis was curious and too “partial”. If one believes the deleveraging story, […]

John McWhorter on James Patterson and Some Odd Numbers on Black Childhood Poverty

by cactus John McWhorter on James Patterson and Some Odd Numbers on Black Childhood Poverty I’m kinda in the home stretch for the fact checking on my book – we’ve revised and rewritten and rechecked so many times I’m ready to plotz, but even so, I’m willing to bet some mistakes will creep in. Its […]

Reducing household financial leverage: the easy way and the hard way

In case you haven’t noticed, I have become slightly less “optimistic” about the prospects of a sustainable U.S. recovery. I used to think that the household deleveraging story was more of a decade-long project, and the economy would cycle throughout. But recent deficit hysteria has me worried; income growth might lapse. What differentiates this recovery […]

US Flow of Funds: wealth recovery fully underway, China?

by Rebecca Wilder(crossposted with Newsneconomics) This week the Federal Reserve reported the Q3 2009 Flow of Funds accounts. The headline indicators show household net worth improving and private debt burden falling. The private sector – households and firms – is dropping leverage. Update: This chart has been modified slightly – the leverage level data (highlighted […]