Joe Sixpack's Situation In 2Q2017: The Average Joe Is Better Off

The Federal Reserve data release (Z.1 Flow of Funds) - which provides insight into the finances of the average household - shows improvement in average household net worth. Our modeled "Joe Sixpack" - who owns a house and has a job, and essentially no other asset - is better off than he was last quarter (and his growth rate of improvement improved).

Analyst Opinion of the Joe Sixpack and Middle Man Indices - Z.1 Flow of Funds

One should worry about the 35% of Americans who do not own any financial asset. Z.1 Flow of Funds net worth data is not inflation adjusted. and

Food for thought [from the data in the Z-1 Flow of Funds]:

  • It is interesting that consumer credit year-over-year growth was 5.9 % according to Fed data.
  • The average house has appreciated around 6% but the REAL owners equity in their house is up 8.8 %.

    (Click on image to enlarge)

  • Real disposable Personal Income year-over-year rate of growth is 1.3 % - and has been in a general down trend since the end of 2014.

    (Click on image to enlarge)

  • The rate of growth of financial assets is 9.1 %.

    (Click on image to enlarge)

  • The year-over-year growth rate of the Z.1 Flow of Funds net worth data was 9.3% [last quarter's year-over-year growth was a revised 8.4%].

    (Click on image to enlarge)

  • But now inflation is starting to be a factor in net worth - as the Consumer Price Index is up 1.9% year-over-year.

You may ask why this analysis is important? It looks at the financial health of the consumer - and in a consumption based economy, it measures the dynamics affecting the consumer.

35% of Americans who own no home or have any other assets are no better off (living from paycheck to paycheck) - and consumption is based simply on income. The median household's income is little better then it was 16 years ago.

First, from the Z.1 Flow of Funds report, what was shown about Household Net Worth and Growth of Domestic Nonfinancial Debt. Cumulative Household net worth grew, while cumulative household debt growth also grew.

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Disclosure: None.

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Comments

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Moon Kil Woong 1 year ago Contributor's comment

Good article. I would tend to agree, however, getting to this is tough given the skew from the non Joe's. The sad fact is there are more non Joe's today on the low end than before and there are less Joe's on the high end although they are much wealthier which is probably a more important change than the lack of change from the average Joes.

Steven Hansen 1 year ago Author's comment

Absolutely - the lower end is just surviving from hand-to-mouth and this group is growing