When most people think about the economy, they naturally think about jobs and income, but wealth is also an important economic concept. N.C. State University economist Mike Walden defines wealth and provides the latest measure of wealth.
“Wealth simply is the difference between the value of assets — things that are valuable that people own, whether it be stocks, mutual funds, a home — minus what they owe — their liabilities, their debt. And so if you have more assets than you have debt, then you’re going to have positive wealth. If you have the reverse, you’re going to be obviously in the hole, in the red.
The latest numbers show that if you look at the total wealth of all U.S. households and all businesses in the U.S. the total comes to $90 trillion. About 75 percent of that $90 trillion is wealth for households. About 25 percent is wealth for businesses.
Now, during the recession, wealth took a big hit. In fact, it was down about 15 percent, and that was one of the reasons why people didn’t spend as much, because there is a tie between what people are willing to spend and their wealth.
But wealth has made a comeback.
Now one other note on wealth. There’s often a question about well how much of this wealth –, particularly company wealth — do foreign interests own? And the best estimate right now is of that $90 trillion about $20 to $25 trillion of that is wealth in the U.S. that is actually owned by foreign interests. On the other hand, there are U.S. companies and U.S. households that own wealth in other countries, and that comes to about also $20 trillion.”Category: Economic Perspective