I used all items CPI of about 13.17% from April 2007 to date, not seasonally adjusted, on April 2007 peak household net worth of $68.82486 trillion.
This yields $77.889 trillion to record date in Q4 2013, meaning the current dollar figure of $80.66 trillion of household net worth represents a real gain, that is an inflation adjusted gain, of about 3.5% in household net worth since April 2007, over six years ago. That's not really saying very much.
The Fed is cited here as saying the vast majority of the increase in household net worth is attributable to rising stock prices, which rose in value by a factor of 2.4 times the rise of housing values, owing to the nearly 30% rise in the stock market in 2013:
The Fed said household net worth rose 14 percent in the full year, driven by a $5.6 trillion rise in the value of shares and a $2.3 trillion increase in the value of real estate.
Using the Wilshire 5000, total stock market capitalization increased $5.65 trillion in nominal terms in 2013. But a mere 20% correction to today's market would wipe out over $4.8 trillion in an instant, and a 40% crash would annihilate over $9.5 trillion.
Housing prices overall have reached a valuation nearly 20% above the long term mean level, which means to some that we are in a reinflated housing bubble. The Case Shiller Home Price Index is up almost 10% just in the last year. The high end of normal on the index used to be 140. Today we are in excess of 150. So reversion to the mean could easily wipe out the $2.3 trillion increase from 2013, and then quite a bit more.
The real increase in net worth may be nothing more than a Fed induced mirage based on artifically cheap money and grotesquely punitive rates of return on same which encourage speculation in asset classes like stocks and real estate.
Wise men know what wicked things are written on the skies.
