Wealth effect
The Aussie stock market looks set to finish the second half of 2021 broadly speaking at the same level as it was at around 30 June, after a strong first half to the calendar year.
Property prices have had a strong run, up 22 per cent in the capital cities over the year to September, and superannuation balances have continued to grow.
Net of all liabilities, total household wealth increased sharply in the September quarter from $13.3 trillion to $13.9 trillion.
Which when spread across approximately 10.7 million households equates to a mean or average wealth per household of just shy of $1.3 million.
There was only a modest increase in debt and liabilities over the year to $2½ trillion, so the ratios people used to watch with interest like debt to assets and debt to equity are now very low (albeit almost never reported).
The average net worth per capita also increased by around 20 per cent over the year to September from $450,000 to to $540,000.
This was roughly equivalent to the annual change in dwelling prices, and the fastest pace of increase in the dozen years since the rapid rebound from the global financial crisis panic.
Excess savings pile up
Household currency and deposit balances had ballooned to a massive $1.4 trillion by September, with something like $240 billion in excess savings piled up through the pandemic shutdowns, according to CBA economist estimates.
This suggests that, if Australia can manage to successfully remain open, the combination of the wealth effect plus record balances sitting in liquid accounts should drive a powerful rebound in the consumption economy.
Unfortunately wages growth - on average - remains slow, so the wealth effect has only been seen for those with substantial superannuation balances, stock positions, and homes, rather than spread across all Australians.
This will be a point of focus in 2022 and beyond: can wages growth ever get back to 3½ per cent, or higher?
