Changes in the value of financial assets, real estate, and durable goods
FRED just expanded its coverage of the Z.1 release from the Board of Governors. Hidden behind this obscure name is a massive dataset that describes the financial situation of the nation, divided into sectors— households, businesses, government, and “the rest of the world.” Here, we look at the assets of households, which we’ve divided into three broad categories: real estate, consumer durables (cars, household appliances, furniture, etc.), and financial assets. The value of these assets has generally increased (no surprise; inflation is a factor), so we decided to divide each series by nominal GDP. This gives us a better idea of the quantities.
We can see that financial assets are the largest type of household asset, and their value relative to the other categories has continually increased; their value has also increased relative to total income (GDP). Currently, households’ financial assets are about 4 times annual GDP, rising from 2.5 times in 1987 when the data start. There hasn’t been a substantial increase in the relative value of real estate, however, which has usually been a little over one year’s worth of GDP (an exception being the run-up before the Financial Crisis). Consumer durable goods has actually decreased, from a third to a quarter of annual GDP. And financial assets comprised about 60% of all household assets in 1987, but now stand at almost 75%.
How this graph was created: From the release table for the balance sheet of households, select the series you want displayed and click “Add to Graph.” From the “Edit Graph” panel, add to each line nominal (not real) GDP. Apply formula a/b/1000 to each line, except for real estate where we don’t need to add /1000 to a/b to get the units right.
Suggested by Christian Zimmermann.