I offer three charts using data from the recently released Flow of Funds Accounts of the United States.
The chart above shows our collective net worth over the years. It is not seasonally adjusted. I have included an exponential growth trend line. It peaked in June of 2007 and two months later I started this blog.
The chart above attempts to remove the inflationary effects to better show the change in real prosperity. In inflation adjusted terms, net worth peaked in December of 2006. Whether or not it is the absolute peak is anyone's guess. You can pretty much guess what I suspect.
Total net worth has gone nowhere in the last decade. It's even worse than it looks though. It's the same amount of total net worth split amongst a larger population. In January of 2000 there were 281 million people in America. Now there are 309 million. We have 10% more people but roughly the same overall net worth. Therefore, the average American is 10% poorer than they were 10 years ago.
The chart above has been put on a log scale. Constant exponential growth, such as the red trend line, is therefore seen as a straight line. Optimists would say that we are still on that line. This is just a short-term setback. I am extremely skeptical. We've never been so far below the line. I just do not see how we can get back to it.
There are enormous challenges and headwinds in our future. We're borrowing massive amounts of money to keep the party going. Meanwhile, my state is attempting to raise taxes yet again.
Gregoire calls special session for Monday
The Senate has proposed $890 million in new taxes, including a tax on bottled water, a three-tenths of a cent increase in the state-sales tax, a boost to tobacco taxes, and an end to certain tax exemptions.
The House has proposed $680 million in new taxes, but its package does not include a sales-tax increase.
This is not an environment where prosperity can flourish. That's my opinion and I'm sticking to it.
Trend Line Disclaimer
FRB: Flow of Funds Accounts
St. Louis Fed: CPI-U (Not Seasonally Adjusted)
Conrad Trendline Break - Reduced Position -
35 minutes ago