Joe Sixpack’s Situation In 1Q2017: The Average Joe Is Better Off

The Federal Reserve data release (Z.1 Flow of Funds) – which provides insight into the finances of the average household – shows improvement in average household net worth. Our modeled “Joe Sixpack” – who owns a house and has a job, and essentially no other asset – is better off than he was last quarter (but his growth rate of improvement continues to decline).

Analyst Opinion of the Joe Sixpack and Middle Man Indices – Z.1 Flow of Funds

One should worry about the 35% of Americans who do not own any financial asset. Z.1 Flow of Funds net worth data is not inflation adjusted. and

Food for thought [from the data in the Z-1 Flow of Funds]:

It is interesting that consumer credit year-over-year growth was 5.9 % according to Fed data.

The average house has appreciated around 6% but the REAL owners equity in their house is up 7.7 % (where the growth rate of their equity has been trending down for the last three years.

Real disposable Personal Income year-over-year rate of growth is 1.9 % – and has been in a general down trend since the end of 2014.

The rate of growth of financial assets is 5.9 % – and has been in a general downtrend since the beginning of 2014.

The year-over-year growth rate of the Z.1 Flow of Funds net worth data was 6.3% [last quarter’s year-over-year growth was a revised 6.4%].

But now inflation is starting to be a factor in net worth – as the Consumer Price Index is up 2.3% year-over-year.

You may ask why this analysis is important? It looks at the financial health of the consumer – and in a consumption based economy, it measures the dynamics affecting the consumer.

35% of Americans who own no home or have any other assets are no better off (living from paycheck to paycheck) – and consumption is based simply on income. The median household’s income is no better then it was 16 years ago – according to Sentier Research’s Household Income Index [click here to read analysis of the current situation]. Here is the graph from their analysis which shows that REAL household income has changed very little in the last two years.