Recently it was reported that households net worth increased $1.7 trillion as of the second quarter of 2017 to $96.2 trillion, mostly on the back of stocks. Equities were responsible for $1.1 trillion while real estate raised $600 billion.
At the same time businesses increased debt by 5.3% and households by 3.6% driven by student and auto loans. Mortgage debt rose 2.8%.
The conclusion is that home and stock prices are rising while at the same time debt is being piled on. Does anyone think this will last without interruption? Even though stock prices are not rising like they did in the dot-com era and mortgage loans are not as frothy as in 2007, just before those stock market crashes, there are forces at work that are very similar.
It is just another red flag waving out there for everyone to see.Â
