Stacked bar chart showing the consumer balance sheet by category. The dollar amount for the categories in Q3 2023 were as follows – financial assets: $112 trillion, real estate: $50 trillion, durable goods and other nonfinancial assets: $9 trillion, mortgages: -$13 trillion, consumer credit: -$5 trillion, other liabilities: -$2 trillion. Net assets (total assets minus total liabilities) were $151 trillion.
Line chart showing debt payment as a percent of disposable personal income from January 1980 to September 2023. Household debt reached three peaks during the period, at more than 12% in 1986/87, more than 12.6% in December 2001, and a high of about 13.2% in December 2007. With the recession of 2008, household debt plunged to less than 10% by December 2012 and remained at roughly that level through June 2020, when it dropped again to 8.8%. The level reached a low in March 2020 of 8.4% and was 9.8% as of Q3 2023.
Line chart showing the increase in household net worth from January 1980 to September 2023. Net worth increases from $9.3 trillion in 1991 to $118.6 trillion by year-end 2019. By the end of Q1 2020 it had fallen to $111.4 trillion and by the end of 2020 it had increased to roughly $130.4 trillion. By the end of 2021 it had risen still further to over $150 trillion, and as of Q3 2023 was about $151 trillion.
Sources: Bloomberg, Federal Reserve Board, and Wells Fargo Investment Institute. Consumer balance sheet data as of September 30, 2023. Household net worth and household debt service ratio: quarterly data from January 1, 1980 to September 30, 2023.
Key Takeaways
- Overall, consumer balance sheets still are healthier than they were during the Global Financial Crisis but are coming under pressure due to dwindling excess cash balances, aggressive credit-card and auto-related borrowing, and from higher interest rates.
- Overall strength among upper-income households has masked financial distress among families in lower income groups pressured by the squeeze on households’ inflation-adjusted incomes and by a drawdown in excess cash balances.