Decoding the Fed's DFA Report: Households Stronger Than Perceived

The Federal Reserve's recent update to the Distribution of Financial Accounts (“DFA”) reflects significant adjustments based on findings from the 2022 Survey of Consumer Finances.

Quick Insights

• Net worth continues to grow, particularly among lower-income households, despite significant declines in equity and mutual fund holdings. Excluding equity holdings, net worth growth is similar to pre-COVID levels despite massive real estate drag.

• The decline in real estate net worth is based on faulty assumptions, showing a similar level of decline to the entirety of the GFC.

• Revised debt levels show consumer credit is growing much slower among average and low-income households relative to pre-COVID trends, despite 2-3X higher inflation. This is true across a multitude of time periods.