Figure 24. The U.S. Household’s Financial Assets Are Far in Excess of Its Liabilities Even After the Correction in the TMT Bubble. It Can Afford to Maintain Its Low Savings Rate for a While
Percent 500 450
Financial Assets and Liabilities of Households (Percent of Diposable Income)
Percent 500 450
400 350
400 350
300
300
250 200
Financial Assets (left scale)
250 200
150
Liabilities (right scale)
150
100
100
50
50 1/80
1/85
1/90
1/95
1/00
1/05
Source: Bureau of Economic Analysis, Federal Reserve Board, and Citigroup Investment Research
Two, as this note has been arguing it is the rich who are driving the low savings rate and high consumption in plutonomies. For the top decile in the U.S., the total net worth to income ratio is exceptionally high at 7.5 times compared to 4.5 times for the rest of the households. The high cushion of net worth of the rich, combined with their gigantic share of income and consumption can sustain the low savings rate (and therefore the current account deficit) in the plutonomies. Please see figure 25.
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