Thursday, September 23, 2021

Total Household Net Worth As Of 2Q 2021 – Two Long-Term Charts

For reference purposes, here is Total Household Net Worth from a long-term perspective (from 1945:Q4 through 2021:Q2).  The last value (as of the September 23, 2021 update) is $141.667529 Trillion:

(click on each chart to enlarge image)

TNWBSHNO $141.667529T

Also of interest is the same metric presented on a “Percent Change from a Year Ago” basis, with a current value of 19.6%:

TNWBSHNO 19.6 Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Board of Governors of the Federal Reserve System; accessed September 23, 2021;


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4456.07 as this post is written

Total Household Net Worth As A Percent Of GDP 2Q 2021

The following chart is from the CalculatedRisk post of September 23, 2021 titled “Fed’s Flow of Funds: Household Net Worth Increased $5.9 Trillion in Q2.” It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from the Federal Reserve’s Z.1 report, “Financial Accounts of the United States“:

(click on chart to enlarge image)

Total Household Net Worth As A Percent Of GDP

As seen in the above-referenced CalculatedRisk post:

The net worth of households and nonprofits rose to $141.7 trillion during the second quarter of 2021. The value of directly and indirectly held corporate equities increased $3.5 trillion and the value of real estate increased $1.2 trillion.

As I have written in previous posts concerning this Household Net Worth (as a percent of GDP) topic:

As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.


I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4465.14 as this post is written

Jerome Powell’s September 22, 2021 Press Conference – Notable Aspects

On Wednesday, September 22, 2021 FOMC Chairman Jerome Powell gave his scheduled September 2021 FOMC Press Conference. (link of video and related materials)

Below are Jerome Powell’s comments I found most notable – although I don’t necessarily agree with them – in the order they appear in the transcript.  These comments are excerpted from the “Transcript of Chairman Powell’s Press Conference“ (preliminary)(pdf) of September 22, 2021, with the accompanying “FOMC Statement” and “Summary of Economic Projections” dated September 22, 2021.

Excerpts from Chairman Powell’s opening comments:

Today the Federal Open Market Committee kept interest rates near zero and maintained our current pace of asset purchases.  These measures, along with our strong guidance on interest rates and on our balance sheet, will ensure that monetary policy will continue to support the economy until the recovery is complete.

Progress on vaccinations and unprecedented fiscal policy actions are also providing strong support to the recovery.  Indicators of economic activity and employment have continued to strengthen.  Real GDP rose at a robust 6.4 percent pace in the first half of the year, and growth is widely expected to continue at a strong pace in the second half.  The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery.  Household spending rose at an especially rapid pace over the first half of the year, but flattened out in July and August as spending softened in COVID-sensitive sectors, such as travel and restaurants.  Additionally, in some industries, near-term supply constraints are restraining activity.  These constraints are particularly acute in the motor vehicle industry, where the worldwide shortage of semiconductors has sharply curtailed production.  Partly reflecting the effects of the virus and supply constraints, forecasts from FOMC participants for economic growth this year have been revised somewhat lower since our June Summary of Economic Projections, but participants still foresee rapid growth.

Excerpts of Jerome Powell’s responses as indicated to various questions:

CHRIS RUGABER. Thank you. Thank you, thank you, Chair Powell. I have a question about jobs and the Fed’s schedule, the Fed’s policy framework that you laid out here. You and other Fed officials have often talked about expecting a job market pickup in September as more children return to school, freeing up more parents to work, COVID abating. You mentioned in the past the extra unemployment benefits expiring. There’s some real-time data suggesting that we may not be seeing much of a return of labor supply. So do you still expect to see that in the next couple of jobs reports? And how would a relatively weak jobs report in September affect your plans? Thank you. 

CHAIR POWELL. So you’re right, we have a, really I’ll call it a unique situation where by many measures the labor market is tight. And 11 million job openings, very widespread, reports from employers all over the economy saying it’s quite difficult to hire people, wages moving up and that. So quite a tight labor market. So our view, I think widespread view a few months ago was that several things were coming together in the fall, including kids back to school, which would, you know, which would lighten caregiving duties, including the expiration of unemployment, extra unemployment benefits, and other things would come together to provide an increase in labor supply, and so we’d get out of this strange world where there’s lots of unemployed people and a high unemployment rate, but a labor shortage. And so what happened was Delta happened. And you had this very sharp spike in Delta cases. And I think — so that affects, for example, when schools are open 60 percent of time or when they’re always at a threat of being closed because of Delta, the Delta variant, you know, you might want to wait rather than going ahead and taking a job and starting work only to have to quit it three weeks later. You’re going to wait until you’re confident of that. So some of that may not have happened. Also people didn’t, you know, as you know, hiring and spending in these face-to-face service industries, travel and leisure, it just kind of stopped during those months. So we — so that — really the big shortfall in labor, in jobs was largely in travel and leisure and because of, clearly because of Delta. So that all happened. And so what we, [inaudible] didn’t happen. I think there’s still — it may just be that it’s going to take more time. But it still seems that inexorably people will — these are people who were largely working back in February of 2020. They’ll get back to work when it’s time to do that. It just may take longer time. You’re right, though, it didn’t happen with any force in September, and a lot of that was Delta. In terms of the, you asked also about the test for November. I think if the economy continues to progress broadly in line with expectations, then I think — and also the overall situation is appropriate for this, then I think we could easily move ahead at the next meeting or not, depending on whether we feel like that, those tests are met. 

CHRIS RUGABER. Just a, If I could just quickly follow-up. I mean, what, how much of that will depend on what kind of jobs report we get for September? And, I mean, is it, you know, are you in a data-dependent phase here where you need to see certain numbers going ahead? Or are we at a point where you’ve accumulated enough progress that – 

CHAIR POWELL. So it is, it’s accumulated progress. So, you know, for me, it wouldn’t take a knockout, great, super strong employment report. It would take a reasonably good employment report for me to feel like that test is met. And others on the Committee, many on the Committee feel that the test is already met. Others want to see more progress. And, you know, we’ll work it out as we go. But I would say that, in my own thinking, the test is all but met. So I don’t personally need to see a very strong employment report, but I’d like it see a decent employment report. I mean, it’s not, it’s, again, it’s not to be confused with the test for liftoff, which is so much higher. 


JEAN YUNG. Thank you, Michelle. Chair Powell, I wanted to ask about how the Fed would balance the two parts of its dual mandate if inflation stays elevated but we still have a labor shortage and participation remains lower than ideal? Would you hold off on raising rates? Or how would you think about that? Thank you. 

CHAIR POWELL. Well, let me say one thing, you’re looking for conditions consistent with maximum employment to liftoff, and those conditions can change over time. So you’re not necessarily bound by a particular level of the unemployment rate or the participation rate or anything else like that, which can change over time. But more to your point really, we actually have a paragraph in our framework, and something like this has been there for a long time. It’s, I think it’s paragraph six. And you’re talking about a situation in which the two goals are not complementary, they’re somehow in tension. And if we judge thats effect, that is the case, what it says is we take into account the employment shortfalls and inflation deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with mandate. So, we used to call that the balanced approach paragraph because it had those words. So it’s a very difficult situation for any Central Bank to be, pardon me, to be in a situation where the two goals are in tension. And that paragraph tries to address it by saying we would sort of weigh the equities between the two. How long will it take? And how big are the gaps? And that kind of thing. We don’t really think we’re in that — we’re sort in that situation, I’d say, in a short-term way. But we think, we do expect that this is sort of because of the COVID shock and the reopening and all that, you’re seeing this temporarily.


SCOTT HORSLEY. Thank you, Mr. Chairman. You talked a little bit about inflation expectations. And there does seem to be something of a divide between market expectations and the views of professional economists, which are pretty much in line with the FOMC members, and lay people’s expectations, at least as reflected in the recent New York Fed survey. How much weight do you put on lay people’s expectations? And what do you think accounts for that divide? 

CHAIR POWELL. So within, let’s just take the household surveys generally. The New York Fed survey, let me talk about that specifically, and this is from the New York Fed. It’s only an eight-year old survey, and it does seem as though the, they’re looking three years out. And it seems like there’s a high correlation between three year and one year. For the most part, surveys are showing that households expect higher inflation in the near-term, but not in the longer-term. And that’s also what expectations are showing. So there are many, many different inflation measures, of course. And that’s why we have this thing called the CIE, which is the, it’s an index of, it’s market-based measures. It’s professional forecasters and it’s household surveys. And you just put them all, it’s not, you know, it doesn’t have a lot of grand theory about it. You put them all in, and you measure the change. So you should be — and also you measure things like the dispersion and that sort of thing, so you can look at all that. And, you know, it tells a story of inflation expectations moving up. Many of the different measures will also show inflation expectations moving back up to where they were in, say 2013, which was before the really — the drop in inflation expectations broadly happened in ’14 and ’15, around then. So, that’s not a troubling thing. But, you know, inflation expectations are terribly important. We spend a lot of time watching them. And if we did see them moving up in a troubling way and running persistently above levels that are really consistent with our mandate, then, you know, we would certainly react to that. But we don’t really see that now. We see more of a moderate increase that is, the first part of which is welcome. And because, you know, inflation expectations had drifted down, and it was good to see them get back up a bit. But, again, we watch carefully. 



The Special Note summarizes my overall thoughts about our economic situation

SPX at 4460.74 as this post is written 

Updates Of Economic Indicators September 2021

The following is an update of various indicators that are supposed to predict and/or depict economic activity. These indicators have been discussed in previous blog posts:

The September 2021 Chicago Fed National Activity Index (CFNAI) updated as of September 23, 2021:

The CFNAI, with a current reading of .29:


source:  Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, September 23, 2021;

The CFNAI-MA3, with a current reading of .43:


source:  Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis, September 23, 2021;

The ECRI WLI (Weekly Leading Index):

As of September 17, 2021 (incorporating data through September 10, 2021) the WLI was at 153.3 and the WLI, Gr. was at 3.6%.

A chart of the WLI,Gr., from the Advisor Perspectives’ ECRI update post of September 17, 2021:

ECRI WLI,Gr. 3.6 percent

The Aruoba-Diebold-Scotti Business Conditions (ADS) Index

The ADS Index as of September 16, 2021, reflecting data from September 11, 2020 through September 11, 2021, with last value .128961:


The Conference Board Leading Economic Index (LEI), Coincident Economic Index (CEI), and Lagging Economic Index (LAG):

As per the September 23, 2021 Conference Board press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased in August” the LEI was at 117.1 in August, the CEI was at 105.9 in August, and the LAG was at 106.3 in August.

An excerpt from the release:

“The U.S. LEI rose sharply in August and remains on a rapidly rising trajectory,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “While the Delta variant—alongside rising inflation fears—could create headwinds for labor markets and the consumer spending outlook in the near term, the trend in the LEI is consistent with robust economic growth in the reminder of the year. Real GDP growth for 2021 is expected to reach nearly 6.0 percent year-over-year, before easing to a still-robust 4.0 percent for 2022.”

Here is a chart of the LEI from the Advisor Perspectives’ Conference Board Leading Economic Index update of September 23, 2021:

Conference Board LEI 117.1


I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4452.88 as this post is written

Wednesday, September 22, 2021

The U.S. Economic Situation – September 22, 2021 Update

Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood.  While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.

There are an array of indications and other “warning signs” – many readily apparent – that current economic activity and financial market performance is accompanied by exceedingly perilous dynamics.
I have written extensively about this peril, including in the following:
Building Financial Danger” (ongoing updates)
My analyses continues to indicate that the growing level of financial danger will lead to the next stock market crash that will also involve (as seen in 2008) various other markets as well.  Key attributes of this next crash is its outsized magnitude (when viewed from an ultra-long term historical perspective) and the resulting economic impact.  This next financial crash is of tremendous concern, as my analyses indicate it will lead to a Super Depression – i.e. an economy characterized by deeply embedded, highly complex, and difficult-to-solve problems.

For long-term reference purposes, here is a chart of the Dow Jones Industrial Average since 1900, depicted on a monthly basis using a LOG scale (updated through September 17, 2021, with a last value of 34,584.88):

(click on chart to enlarge image)(chart courtesy of

DJIA since 1900


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4377.91 as this post is written

Tuesday, September 21, 2021

Zillow Q3 2021 Home Price Expectations Survey – Summary & Comments

On September 21, 2021, the Zillow Q3 2021 Home Price Expectations Survey results were released.  This survey is done on a quarterly basis.

An excerpt from the press release:

Experts surveyed expect home prices nationwide to increase a cumulative 31.8% through 2025, the equivalent of an average annual rate of 5.7% — far below the current annual appreciation of about 17%.

“Across the U.S., home value appreciation rates and annual rent price increases are at historically high levels, and home price expectations are now the highest we’ve recorded in the 12-year history of this survey,” said Terry Loebs, founder of Pulsenomics, the independent research firm that fielded the survey. “The silver lining for aspiring homeowners is that the worst of the housing supply crunch looks to finally be behind us, and most experts believe that the past year’s rapid price boil has begun to simmer down.”     

Various Q3 2021 Zillow Home Price Expectations Survey charts are available, including that seen below:

U.S. Home Price Expectations

As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the U.S. Zillow Home Value Index, will continually climb.

The detail of the Q3 2021 Home Price Expectations Survey is interesting.  Of the 111 survey respondents, only 3 (of the displayed responses) forecasts a cumulative price decrease through 2025.

The Median Cumulative Home Price Appreciation for years 2021-2025 is seen as 11.0%, 18.16%, 23.79%, 28.49%, and 33.27%, respectively.

For a variety of reasons, I continue to believe that these forecasts will prove far too optimistic in hindsight.

I have written extensively about the residential real estate situation.  For a variety of reasons, it is exceedingly complex.  While many people continue to have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis.  Residential real estate is an exceedingly large asset bubble. As such, from these price levels there exists outsized potential for a price decline of severe magnitude. 


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4363.45 as this post is written

Monday, September 20, 2021

Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” report of September 17, 2021:

from page 24:

(click on charts to enlarge images)

S&P500 Earnings Forecasts 2021 & 2022

from page 25:

S&P500 EPS 2011-2022


I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4432.99 as this post is written

Friday, September 17, 2021

S&P500 EPS Estimates For 2021, 2022 & 2023 From Industry Analysts

As many are aware, Refinitiv publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings label)

The following estimates are from Exhibit 24 of the “S&P500 Earnings Scorecard” (pdf) of September 17, 2021, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; the Year 2019 value is $162.93/share; and the Year 2020 value is $139.72/share;

Year 2021 estimate:


Year 2022 estimate:


Year 2023 estimate:



I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 4435.51 as this post is written