On March 7, 2025, I highlighted Herb Stein’s article “Balance of Payments,” which appeared in David R. Henderson, ed. The Concise Encyclopedia of Economics. That led to a lively discussion in the Comments section.
Frequent commenter Warren Platts noted that the U.S. Net International Investment as a percentage of GDP has gone downhill since about 2007 and now sits at minus 90%.
That might sound scary and it did make me wonder.
But what matters to most Americans is not how much foreign investment there is but, rather, how much their net worth is and how that has changed.
So I looked at those data and was reassured.
The St. Louis Fed’s FRED site shows U.S. households’ net worth in current dollars from the 4th quarter of 1987 to the 4th quarter of 2024. It rose from $17.426 trillion in 1987 to $160.345 trillion in 2024. $17.426 trillion in 1987 $ is $47.641 trillion in 2024 $. So household net worth over those 37 years increased by 237%.
Of course, the number of households increased too. According to FRED, it rose from 89.479 million in 1987 to 132.216 million in 2024.
That means that average household wealth, in 2024 dollars, rose from $532,426 in 1987 to $1,217,504 in 2024, an increase of 129%.
How about for the shorter period referenced by commenter Platts: 2007 to 2024?
In 2007, household net worth was $65.754 trillion. In 2024 $, that’s $98.702 trillion. So household net worth increased by 62.5%.
The number of households increased from 116.011 million in 2007 to 132.216 million in 2024.
So household net worth per household increased from $850,799 in 2007 to $1,217,504 in 2024, an increase of 43%.
Note that these are averages, not medians. The net worth for a median household at each point in time is below the average.
But what matters here is the average, given that the issue is the situation of the United States as a whole. It says that on average, Americans are getting wealthier despite (maybe partly because of?) increased foreign investment.
