by Chris Hamilton
Even in a central bank driven world, some things probably still matter. Given the US economy is nearly three quarters premised on consumption; the income, spending, and savings of those consumers probably still matters. Just two of the most important variables shown in the chart below:
Household net worth (value of all assets held) as a percentage of disposable personal income (all sources of income minus the tax paid on that income).
Personal savings rate (the amount remaining from disposable personal income, after all expenditures, that is available to be saved in a bank and/or 401k / IRA, etc.).
Below I narrow in from 1985 through Q4 of 2017. The personal savings rate is on the verge of making an all time low while my best estimation for household net worth has asset prices setting new highs versus far slower growing disposable personal income. I’m not a money manager, not an economist, I have nothing for you to buy, and give this advice freely…but historically speaking, now is the time to sell.