On March 7, 2025, I drew attention to Herb Stein’s insightful article “Balance of Payments,” featured in David R. Henderson’s edited volume, The Concise Encyclopedia of Economics. This sparked an engaging exchange in the Comments section.
Frequent contributor Warren Platts pointed out the concerning trend of the U.S. Net International Investment as a percentage of GDP, which has been on a downward trajectory since around 2007, currently languishing at a daunting minus 90%.
While this statistic may sound alarming, it prompted me to ponder its implications.
However, the real concern for most Americans isn’t the volume of foreign investment; rather, it’s the evolution of their net worth and how that has shifted over time.
To explore this, I delved into the data and found a comforting trend.
The St. Louis Fed’s FRED site reveals that U.S. households’ net worth in current dollars surged from $17.426 trillion in the 4th quarter of 1987 to an impressive $160.345 trillion in the 4th quarter of 2024. To put this into perspective, the $17.426 trillion from 1987 translates to $47.641 trillion in 2024 dollars. Thus, over these 37 years, household net worth has escalated by a staggering 237%.
Of course, the number of households has increased as well. According to FRED, it grew from 89.479 million in 1987 to 132.216 million in 2024.
This means that the average wealth per household, when adjusted for 2024 dollars, climbed from $532,426 in 1987 to $1,217,504 in 2024, marking a 129% increase.
Now, let’s narrow our focus to the shorter timeframe highlighted by commenter Platts: from 2007 to 2024.
In 2007, household net worth stood at $65.754 trillion. In 2024 dollars, this equates to $98.702 trillion, reflecting a 62.5% increase in household net worth.
The number of households rose from 116.011 million in 2007 to 132.216 million in 2024.
This results in an increase in household net worth per household from $850,799 in 2007 to $1,217,504 in 2024, a 43% uplift.
It’s important to note that these figures represent averages, not medians. The net worth for a median household at any given point is typically lower than the average.
Nevertheless, what’s significant here is the average, as it reflects the overall economic landscape of the United States. This data suggests that, on average, Americans are indeed becoming wealthier, perhaps in part due to the influx of foreign investment.
