The Wall Street Journal reports in “Five Reasons Why You are Poor” that, according to the Federal Reserve, household net worth rose to $80.6 trillion in the fourth quarter of 2013, up from $70.83 trillion for the same period in 2013–an increase of nearly $10 trillion over the last four quarters–thanks to rising values of homes and U.S. stocks.
Maybe so, but those numbers don’t make sense to me.
There are about 120 million households in the US. If their total net worth is $80 trillion, their average net worth is about $670,000. I don’t know how the Federal Reserve computes average household net worth, but I don’t know very many people whose average household net worth is anywhere close to $670,000. If America’s average household net worth were really $670,000–and if that wealth were distributed on a bell curve basis–I can’t imagine that we’d have any economic problems at all in this country. There’s something wrong and fundamentally misleading about the $80 trillion number the Fed used to describe American total household net worth. . . .
The Wall Street Journal continued to report that “But . . . employee pay as a share of national income has fallen to its lowest levels since 1951.
“Here are five reasons Americans still feel poor:”