Net Worth, Debt, and Wages

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That would be a really nice chart if it wasn't for two minor details.

Minor Detail #1

Head and shoulders (chart pattern)

Head and Shoulders is an extremely useful tool after its confirmation to estimate and measure the minimum probable extent of the subsequent move from the neckline. To find the distance of subsequent move, measure the vertical distance from the peak of the head to the neckline. Then measure this same distance down from the neckline beginning at the point where prices penetrate the neckline after the completion of the right shoulder. This gives the minimum objective of how far prices can decline after the completion of this top formation.

I'm not a big fan of technical analysis, but those who are might suggest that completing the right shoulder could ultimately take us to the blue trend line. As a believer in return to the median theories (as a general rule), who am I to argue differently?

Minor Detail #2


Click to enlarge.

Just look at all that debt. It's equivalent to EIGHT years of national wages. Let's combine the two charts.


Click to enlarge.

It would seem that we cannot grow our debts to infinity in order to grow our net worth to infinity. Big shocker.

That said, we're certainly trying to claw our way back up to the channel and resume the former trend. Good luck on that one long-term. Sigh.

Source Data:
St. Louis Fed: Household Net Worth / Wages
St. Louis Fed: Total Credit Market Debt Owed / Wages