I saw this a few days ago: Net worth surged 37% in pandemic era for the typical family, Fed finds — the most on record.
Net worth is a measure of household assets after accounting for liabilities. After accounting for inflation, median net worth jumped to $192,900, a 37% increase from 2019-22, the Fed found.
That percentage growth was the largest since the Fed started its modern survey in 1989. It was also more than double the next-largest increase on record: Between 2004 and 2007, right before the Great Recession, real median net worth rose 18%.
First, it found that the average American household’s net worth is over $1 million. Outliers can distort averages, of course, but even median household wealth is at the Fed’s highest level ever recorded. In 2019, it was still stuck below pre-Great Recession levels. By 2022, however, it had reached $192,000, eclipsing the 2007 mark by more than 10 percent, and almost doubling the post-Great Recession 2010 figure. (These and all subsequent data are adjusted for inflation.)
Of course, the mean is skewed by huge outliers.
Nuts…The media asks “Why is inflation at 5%?” Well, this is at least partially why. The economy is booming, and Americans are obscenely wealthy. Or “Who will spend $1,000/month on a weight loss drug?” Yeah, plenty of people. Americans got money. Yet at the same time, lots of homelessness too. Weird times we live in where the media is nothing but 24-7 stories of social decay and crisis, yet so much wealth too. The wealth is not really where you are looking. It’s people spending money on pricey vacations, private schools, iPhone apps, elective procedures, remodeling etc…not obvious, outward displays of wealth. It’s not so much on ‘things’, but rather on optimizing life.
There is a disconnect between how people perceive the economy and the media’s coverage of the economy, which is more negative, compared to reality, which is far more optimistic and positive. This disconnect can in part be explained by how rich people disinclined to ‘show off’ their wealth on flashy material possessions, but rather said wealth is ‘locked up’ in seemingly more mundane things like an inconspicuous suburban home that is worth a million dollars (not a gated mansion) or six or seven-figure retirement accounts, stock equity, etc.
Also, media coverage about the economy tends to be lopsided, focusing on those who are falling behind, and overlooking that many millions of Americans are pulling ahead too. This is understandable from a business perspective: negativity is good for clicks, ad-dollars, virality, pageviews, etc.
Reddit “FIRE” and investing subs are full of stories of 30-somethings who have amassed considerable wealth (posts like “$8.5m NW at 38yrs Next Move?”) through a combination of stocks/compensation, huge tech salaries, inheritances, and real estate. The post-2009 ‘tech boom’ shows no sign of slowing despite the overblown layoffs in 2022, rising interest rates, or high inflation. This is part of the overall post-2009 “white-collar salary boom” in which salaries and other compensation for college-educated professionals has surged. As the Nasdaq and behemoth-sized tech stock like Meta, Amazon, and Alphabet stage massive recoveries in 2023 (Meta stock up 200% so far for 2023), the layoffs and downturn of 2022 is looking like a distant memory, like the layoffs in 2009 or 2001.
This also why conventional narratives are wrong, or are at least incomplete, whether it’s “college is a ripoff or too expensive” or “high vs low COL areas” or “affordable housing”. The media only focuses on the negatives or only one side of the equation, not the positives.
With few exceptions, the people on Reddit who have the most money at an early age, like in tech or other high-paying professions, almost exclusively live in high-COL areas and have college degrees. Coincidence? It’s almost as if college is a good investment, or that high-COL areas are expensive for a reason: because that is also where the money and opportunity is. It’s a supply vs. demand problem, or a matter of tradeoffs (such as going into debt at an early age to make more money at a later age, or moving to an expensive area to get a good job)–not some grand, global conspiracy to keep supply down.
Online contrarian culture means reflexively being skeptical of conventional wisdom, to a fault, but sometimes the beaten path “college to cooperate” is the best one. The odds that some guy on YouTube or social media promising financial independence thanks to his ‘one weird trick’ and who has it all figured out, is slim. The college wage premium is a ‘thing’, and in the 13+ years since the bottom of the 2008 crisis has compounded a lot. Pundits, like on Twitter, love to shit on those ‘useless degrees’, or media doom and gloom about “young people going into debt to get degrees,” yet it’s those same young people getting those 6-figure jobs. It’s just that the media focuses much more on the student loan indebtedness aspect and less on the job aspect.
But at the same time, shrinkflation and other hidden forms of inflation are annoying. Even if Americans are wealthier than ever, it seems like we’re being nickeled and dimed at a record rate too. Nothing is getting cheaper except for certain clothes and electronics. Adjusted for inflation, iPhones are about the same price as in 2010, but apps and service plans are more expensive. Healthcare is too expensive, and to even try to broach that subject in the detail it deserves, necessitates another blog post. So it’s not all positive.