SFA Research Corner: Stronger Assets, Lower Household Debt and Improving Labor Market: The Trifecta of ABS Credit Performance

The Federal Reserve’s Z.1 data report, released on December 9, showed household net worth rose to $145 trillion and now stands 54% above its level five years ago. This rise in net worth is supported by real estate values, up 50%, and corporate equities like mutual funds, retirement or pension plans, up 90% over the same period. However, not all have benefited equally from the rise in asset values with the top 1% benefitting the most from the rise in corporate equity values. Stronger assets, lower household debt and an improving labor market have helped many households meet their financial obligations, which bodes well for the credit performance of securitization backed by consumers loans.