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Torsten Slok presents this graph and writes, “The bottom line is that the tailwind to consumer spending for homeowners and equity owners is significant, in particular when combined with record-high cash flows from fixed income.”

Source: Torsten Slok/Apollo, 19 July 2024.

This made me wonder whether we’ve seen NBER peaks at quarters where household net worth has been rising. The household net worth series is relatively short, so I use household and nonprofit net worth, deflated by the consumption deflator.

Figure 1: Real household and nonprofit net worth, in logs normalized to NBER business cycle peak. Latest cycle (bold black) assumes peak at 2024Q1. Source: Fed Flow of Funds, BEA via FRED, NBER, and author’s calculations.

Of the previous five recessions, real household net worth has been decreasing into the NBER peak four times. The sole exception was the recession associated with the 2020 pandemic. By way of contrast, in 2024Q1, real net worth increased by 10% (q/q AR).

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