Market All-Time Highs and Consumer Net Worth

This is Brad Barrie, Chief Investment Officer and Portfolio Manager with Dynamic Wealth Group.  Welcome to this market and economic update. In this video, we’ll discuss the market returning to new all-time highs and the state of the U.S. consumer.

This is an important topic because markets have experienced such a volatile year. For some investors, it may feel like it’s been a terrible year for returns when really the opposite is true.  The Dow recently surpassed 40,000 for the first time and most major indices are near record levels.

This is because markets have swung quickly based on economic data and expectations around the Federal Reserve. Over the next few minutes, we’ll talk about perhaps the most important economic topic, the financial health of U.S. consumers.

First, this chart shows the level of household net worth over the past three decades. You can see the steady rise in net worth due to the growing value of financial assets, such as stock and bond portfolios, and non-financial assets such as homes.

Specifically, net worth tends to increase during bull markets and when home prices are rising. This is clearly one of the main drivers of wealth not just over the past few years, but over history.

This shows that that the stock market tends to increase consumer balance sheets and their financial health. However, the opposite is also true due to what economist’s call “the wealth effect.” This is simply the fact that consumers tend to spend more when they feel more financially secure.

So, when consumers feel that they’re doing better, either because they have higher wages, their investment portfolios have grown, or their home prices are rising, they tend to spend more on goods and services. In turn, this boosts corporate revenues and can help stock prices over time.

It is important to note, however, that this chart is not adjusted for inflation.  And inflation can certainly have a dramatic impact on the real growth of consumers net worth & purchasing power.

Second, although overall net worth has increased, the level of consumer debt has also grown. This means that for many households, the burden of monthly payments has increased, especially as interest rates have risen.

Specifically, total credit card debt in the U.S. has jumped to $1.1 trillion and auto loan debt is now at $1.6 trillion.

Delinquency rates have accelerated. According to the Federal Reserve Bank of New York’s latest Household Debt and Credit report, credit card delinquencies have risen to almost 9% of balances compared to the 10-year average of only around 6%.

Consumers are also saving less today than they have historically. So, while households are doing very well on average, many continue to struggle under debt loads and higher monthly payments.

Finally, this chart shows the level of consumer sentiment. These numbers can fluctuate significantly from month-to-month since consumers are impacted by many factors.

Most recently, sentiment has been poor for all of the reasons you might expect: higher inflation and an uncertain economy.

That said, unemployment is still exceptionally low and wage gains are generally strong. If inflation can continue to come down, as it did in the latest Consumer Price Index report, then hopefully sentiment can improve.

What does all of this mean for long-term investors? Consumer spending is one of the cornerstones of economic growth in the U.S. The fact that consumers have been strong is one reason markets have rebounded and have reached new all-time highs. 

The unknown is if this will continue?  Frequent listeners know, we are not in the business of predicting the future, but rather preparing for the future, regardless of what happens.  There are endless variables that can impact the economy and the market, that is why it is crucial to be Truly Diversified with your investment portfolio.

And as always, it’s important to focus on longer-term investing rather than day-to-day market swings. We hope you found these insights valuable. If you are a financial advisor and would like more information on our Multi-Dimensional Approach towards asset management, please visit our website, or reach out directly by emailing us at:  If you are an individual investor, we are happy to address any questions you may have and put you in touch with a qualified advisor if so desired.   Until next time, take care everyone, and make smart, logical & fact-based financial decisions.


Clearnomics and Dynamic Wealth Group, LLC are not affiliated entities.  No part of this should be taken as investment advice.  Consult your financial advisor for specific investment recommendations tailored to your specific situation. 

Dynamic Wealth Group (“Dynamic”) is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Dynamic by the SEC, nor does it indicate that Dynamic has attained a particular level of skill or ability. This material prepared by Dynamic is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Opinions expressed by Dynamic are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Dynamic, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.

Dynamic does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.

Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. Past performance is no guarantee of future results. Actual returns may be lower.

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