Household net worth recovering nicely

According to the Federal Reserve's calculation of households' balance sheet, household net worth at the end of last year recovered to its highest level since the onset of the 2008-2009 recession. Net worth is still about 8.5% below its pre-recession highs after adjusting for inflation, however, but at this rate (net worth rose 9% last year) we could see a new high in net worth in both nominal and real terms by the end of this year. Equities are already up over 8% year to date.

The recovery since late 2007 has been healthy in every respect: equity valuations are up, savings are up, real estate values are up, and liabilities are down. Households have deleveraged and built up their savings, and the recovering economy has boosted equities and, more recently, housing prices.

According to Radar Logic, housing prices rose over 13% last year.

The recovery may have been slow and agonizing for many, but it is for real. The U.S. economy has gone through tremendous adjustments that have enabled it to resume a normal and healthy path of growth.