Whereas the Great Financial Crisis (GFC) saw the destruction of household net worth (the bursting of a housing bubble) of about 70% of GDP in the 3 years through mid-2009, laying the ground for liquidity trap-like conditions, the Great Pandemic has seen household net worth increase about 120% of GDP in about half the time.

Consider this: Over the five quarters since 2020Q1, net worth of US households has increased on average by 29% of 2019 GDP each quarter.

This has driven household net worth in the US to above 6 times GDP for the first time since records began while the ratio of assets to liabilities has reached 9 for the first time since the early-1970s.

Still, while relatively small, the monetary part of this improved net wealth—and a truer expression of new saving as opposed to valuation gains—is special. Why? It is not price sensitive. That is, if all households try to simultaneously spend their monetary saving they don’t lose their nominal value. The hot potato is simply passed on to someone else within the community. But if all households tried to cash in on their equity holdings or their housing wealth at the same time, the price of these assets would adjust down until the transaction was no longer worthwhile.