Viewpoint: Household finances

Household finances

Delayed due to the government shutdown, the data is now in hand showing that U.S. household balance sheets began the fourth quarter in historically good shape, which goes some way to explaining the ongoing resiliency in consumer spending. Further, it continues to suggest that there is capacity to spend more (and save less) out of current income going forward as net worth sits at all-time highs, which, in turn, provides a solid underpinning for the U.S. economy.

The quarterly Financial Accounts of the United States,¹ published by the U.S. Federal Reserve (Fed), showed that aggregate household net worth in the U.S. rose by US$6 trillion over the three months ended September to a new record high of US$181.6 trillion, driven by increases in financial asset holdings in the quarter. That represents a net worth of about $662,000 per American over the age of 16, or $1.36 million per U.S. household². Adjusted for inflation, that also represents the largest excess of asset values over liabilities on record.

Inflation-adjusted* household aggregate net worth, U.S.
(trillions of 2024 US dollars)

*Household net worth divided by the personal consumption expenditure price deflator; shaded regions represent periods of US recession; source: Guardian Capital, based on data from the U.S. Federal Reserve Board to Q3 2025

Even more positively, from a macro perspective, the U.S. Distributional Financial Accounts³ that disaggregate the household balance sheet data, published by the Fed at the end of last week, continue to show that those less wealthy households have been participating in the general gains in net worth this cycle — so, not just the richest households adding to their fortunes, but the broad population and strong breadth of a cycle breeds durability.

As per the data, the bottom 50% of U.S. households by wealth have seen their net worth increase by 128% since the start of 2020 (to a record-high average of about US$64,000 per household), while the other cohorts have experienced relative gains of roughly half that over the same time span (though, the absolute dollar gains have been larger; average net worth for the upper-middle 40% was about US$954,000 at the end of Q3 and US$8.8 million for the top 10%).

Household net worth by wealth percentile, U.S.
(indexed; Q1 2020 = 100)

Shaded regions represent periods of US recession; source: Guardian Capital, based on data from the U.S. Federal Reserve Board to Q3 2025

These are strong gains overall and a significant relative improvement in financial position for the, typically, more financially vulnerable half of the U.S. population — though these households did underperform in the market-driven gains in Q3, with the bottom 50% seeing their net worth rise 2.5% on average versus +4.5% for the top 10% (the middle 40% saw more tepid gains of 1.4%) given that financial assets tend to be much more prevalent on the balance sheets of the wealthier households.

Household balance sheet asset mix by net worth percentile, U.S.
(percent of total assets)

Source: Guardian Capital, based on data from the U.S. Federal Reserve Board as at Q3 2025

It is also notable from a financial health perspective that U.S. household solvency indicators have improved across the wealth spectrum, too; there are scant signs of excessive leverage being used to generate these wealth gains. The household debt-to-asset ratio for the bottom 50% of U.S. households by wealth at 58.5% is the lowest it has been since 1993, while ratio for the upper-middle 40% (14.6%) and top 10% by wealth (4.1%) are the lowest on record back to the end of 1989, which suggests there is capacity to borrow (with positive potential implications for the U.S. housing market and spending).

Household debt-to-asset ratio by net worth percentile, U.S.
(percent of total assets)

Source: Guardian Capital, based on data from the U.S. Federal Reserve Board to Q3 2025

Note, too, that the breadth story is similar when looking at U.S. households by income cohorts rather than net worth (though less dramatic; wealth is more equally distributed based on incomes and the bottom income cohorts tend to have higher average net worth; the bottom 40% of households by income had an average net worth of $228,000 as at the end of Q3) — the net worth gains have been pretty uniform across the U.S. household income spectrum with those bottom 40% of households seeing wealth increase by 57%, +52% for the next 40% and +61% for the top 20%.

Household net worth by income percentile, U.S.
(indexed; Q1 2020 = 100)

Shaded regions represent periods of US recession; source: Guardian Capital, based on data from the U.S. Federal Reserve Board to Q3 2025

The broad improvement in U.S. household finances over this cycle, particularly among those who are less well-off, goes a long way toward explaining why consumer spending has been able to show sustained strength over the last five years. Strong financial positions combined with still firm job markets in the U.S. support spending over and above the necessities of life, even in the face of rising costs of living, and, while I have focused on the U.S. here, given its relative importance, it is also the case that household net worth is also at all-time highs across the aggregate Eurozone⁴, Japan⁵, and Canada⁶ as well.

Household net worth
(index; Q1 2020=100; local currency basis)

*Based on financial assets only; shaded regions represent periods of US recession; source: Guardian Capital, using data from Statistics Canada and U.S. Federal Reserve, European Central Bank and Bank of Japan to Q3 2025

The bottom line is that consumers broadly appear to remain on pretty solid footing for now, which could provide continued support for the most important cog in the global economic machine.

_____________
David Onyett-Jeffries
David Onyett-Jeffries is Vice President, Economics & Multi Asset Solutions, at Guardian Capital LP (GCLP). He provides macroeconomic guidance to GCLP and its affiliates. Additionally, he is a portfolio manager of GCLP’s multi-asset portfolios and funds and works closely with GCLP’s Directed Outcomes team.

¹ Board of Governors of the Federal Reserve System, Releases, Financial Accounts of the United States – Z.1, January 9, 2026, https://www.federalreserve.gov/releases/z1/
² Federal Reserve Bank of St. Louis, Household Estimates (TTLHHM156N), December 17, 2025, https://fred.stlouisfed.org/series/TTLHHM156N
³ Board of Governors of the Federal Reserve System, Z.1-Financial Accounts, Enhanced Financial Accounts, DFA: Distributional Financial Accounts, Distributional Financial Accounts Overview, January 19, 2026, https://www.federalreserve.gov/releases/z1/dataviz/dfa/
⁴ European Central Bank, Eurosystem, ECB data portal, Net worth of households, Euro area 20, Quarterly, January 13, 2026, https://data.ecb.europa.eu/data/datasets/QSA/QSA.Q.N.I9.W0.S1M.S1._Z.B.B90._Z._Z._Z.XDC._T.S.V.N._T
⁵ Bank of Japan, Time Series Data Search, Flow of Funds, Quarterly Data, January 19, 2025, https://www.stat-search.boj.or.jp/ssi/cgi-bin/famecgi2?cgi=$nme_a000_en&lstSelection=FF
⁶ Statistics Canada, National Balance Sheet Accounts, National Balance Sheet Accounts (x 1,000,000), December 11, 2025, https://www150.statcan.gc.ca/t1/tbl1/en/

This commentary is for general informational purposes only and does not constitute investment, financial, legal, accounting, tax advice or a recommendation to buy, sell or hold a security. It shall under no circumstances be considered an offer or solicitation to deal in any product or security mentioned herein. It is only intended for the audience to whom it has been distributed and may not be reproduced or redistributed without the consent of Guardian Capital LP. This information is not intended for distribution into any jurisdiction where such distribution is restricted by law or regulation.

The opinions expressed are as of the date of publication and are subject to change without notice. Assumptions, opinions and estimates are provided for illustrative purposes only and are subject to significant limitations. Reliance upon this information is at the sole discretion of the reader. This document includes information concerning financial markets that were developed at a particular point in time. This information is subject to change at any time, without notice, and without update. This commentary may also include forward-looking statements concerning anticipated results, circumstances, and expectations regarding future events. Forward-looking statements require assumptions to be made and are, therefore, subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Investing involves risk. Equity markets are volatile and will increase and decrease in response to economic, political, regulatory and other developments. Investments in foreign securities involve certain risks that differ from the risks of investing in domestic securities. Adverse political, economic, social or other conditions in a foreign country may make the stocks of that country difficult or impossible to sell. It is more difficult to obtain reliable information about some foreign securities. The costs of investing in some foreign markets may be higher than investing in domestic markets. Investments in foreign securities are also subject to currency fluctuations. The risks and potential rewards are usually greater for small companies and companies located in emerging markets. Bond markets and fixed-income securities are sensitive to interest rate movements. Inflation, credit and default risks are all associated with fixed-income securities. Diversification may not protect against market risk and loss of principal may result. Index returns are for information purposes only and do not represent actual strategy or fund performance. Index performance returns do not reflect the impact of management fees, transaction costs or expenses. Certain information contained in this document has been obtained from external parties, which we believe to be reliable; however, we cannot guarantee its accuracy.

Guardian Capital LP manages portfolios for defined benefit and defined contribution pension plans, insurance companies, foundations, endowments and investment funds. Guardian Capital LP is a wholly owned subsidiary of Guardian Capital Group Limited, a publicly traded firm listed on the Toronto Stock Exchange. For further information on Guardian Capital LP, please visit www.guardiancapital.com. All trademarks, registered and unregistered, are owned by Guardian Capital Group Limited and are used under license.

Published: January 20, 2025