Here is an interesting chart on Consumer Balance Sheet, Savings Rate, and Debt Service Ratio posted by Barry Ritholtz.







Ritholtz also notes Consumers Climb Out of Their Bunkers



From the “It-Aint-That-Bad” file comes the most recent reports of consumer spending.



Luxury sales rose 22.7% (Mastercard SpendingPulse)

Furniture sales rose 13.8% and appliance sales rose 6.9%

Auto sales gained 24% from year ago levels (AutoTalk)

March was the 7th consecutive month of increasing retail sales growth

Cargo volume at major ports imports is trending towards an 8% increase in April

Commerce Department’s personal consumption expenditures was $34.7 billion in February, an increase of 0.3% over January — the fifth monthly gain in a row.

Gasoline demand continues to rise — +1.2% — before the summer driving season.

It will be some time before we return to the peak levels of 2006-07, when Houses were used more as equity structures than shelter. But that does not mean we won’t see marked improvements over the coming quarters.

will

State Sales Tax Revenues

Consumer Balance Sheet Chart Brutally Misleading

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2009).



Financial Wealth Distribution







Housing, Liquid Assets Distribution







Income and Wealth by Race







Besides illustrating the significance of home ownership as a measure of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2007, the average white household had 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are in the neighborhood of 100:1.

Extrapolating from these figures, we see that 70% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.



Table 5a: Concentration of stock ownership in the United States, 2001-2007







Table 5b: Amount of stock owned by various wealth classes in the U.S., 2007







Just as wealth can lead to power, so too can power lead to wealth. Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government. If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth.



If the top 20% have 84% of the wealth (and recall that 10% have 85% to 90% of the stocks, bonds, trust funds, and business equity), that means that the United States is a power pyramid. It's tough for the bottom 80% -- maybe even the bottom 90% -- to get organized and exercise much power.

Summary of Key Points

The Bottom 80% have a mere 7% of financial wealth.

The Bottom 80% have a mere 8.9% of stock ownership

Only 31.6% of the population has more than $10,000 in stocks.

70% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.

Economic Implications