How America’s Wealth Bubble Is Boosting Consumer Confidence

by Jesse Colombo

ZeroHedge posted an interesting chart a few days ago showing how affluent Americans (those making over $50,000 a year) have not been more confident since the dot com bubble:

Affluent Consumer Confidence

While strong consumer confidence may seem like a good thing when taken at face value, the contrarian in me sees it as a warning of the kind of over-exuberance seen during bubbles like the dot-com bubble and housing bubble.Unfortunately, I believe that the U.S. is experiencing an unsustainable, artificial household wealth bubble that is causing affluent consumers to be over-optimistic despite the fact that our economic boom is largely driven by cheap credit and is going to end in a painful bust.

As I explained in a recent presentation, U.S. household wealth has surged by approximately $46 trillion or 83% since 2009 to an all-time high of $100.8 trillion. Since 1951, household wealth has averaged 379% of the GDP, while the Dot-com bubble peaked at 429%, the housing bubble topped out at 473%, and the current bubble has inflated household wealth to a record 505% of GDP (see the chart below):

Net Worth As Percent Of GDP

Please watch my presentation “Why U.S. Wealth Is In A Bubble” to learn more: