Household wealth (or household net worth) in the United States fell by a record $3.72 trillion in the fourth quarter of 2018. The fall in the stock markets would have probably been the largest contributor to the overall fall.
This is an interesting one, one of our three U.S. recession indicators is the U.S. unemployment rate.
The U.S. Bureau of Labor Statistics data reveals that the U.S. unemployment rate has hit a new multi-year low four to eight months before the start of every recession since the 1940s. In other words, the economy hits full employment four to eight months before the start of a recession.
The unemployment rate goes up at least 1% and then doesn’t go back down without a recession occurring.
There are various ways to look at Household Debt (total debt outstanding including mortgages, loans, credit cards and other debt) in the United States, we look at two today.
The first is debt servicing costs to disposable income which effectively is how much it costs to service household debt as a fraction of disposable (after tax) income. The second is household debt outstanding to disposable income which effectively is how much debt there is with respect to the same disposable (after tax) income measure.