I came across an article talking about the total net worth of the United States, coming to the conclusion that the US has a balance sheet $188 trillion. And in this article, the author made the following point which I found rather interesting:
To get this information, John Rutledge (the author) started with the quarterly Z1 - Flow of Funds Report published by the Federal Reserve every quarter, which includes a balance sheet for the entire country comprised of US assets and liabilities, personal, corporate, and government, compiled at least yearly since 1948 (and quarterly starting in 1950). Mr. Rutledge goes on to explain why he thinks Z1 is incomplete - a good start, but incomplete - but that’s beyond both the scope of this OP and the efforts I want to put into this right now.
Regardless, financial growth is defined by having a strong balance sheet where assets exceed liabilities (and this spread increasing, i.e., you’re becoming “richer”)… and focusing on such metrics like GDP, the DJIA, the national debt without context to the larger picture of how these things affect the overall national wealth is, at best incomplete and, at worst, dangerous. For example, most reporting about the national debt largely ignores what the debt is being used for - it’s just assumed that it’s “wasted”, that this money somehow disappears, and that the effect of $17 trillion in debt is an automatic $17 trillion hole in our wealth with no benefit on the asset side. Nobody has ever proved such a thing - for tens of millions of Americans, it’s just a given.
For example, I hear charges of how “Obama exploded the national debt” (or Reagan, to name the debt bogeyman for each party) with the implicit (and stated) assumption that all balance sheet impacts of debt is negative… but even in our world, that’s not true. I take on a $100k mortgage to buy a house worth $150k… well, I’m up $50k, right? If I borrow $40 million to build a hospital… once built, I’ll have a hospital to add to the balance sheet as an asset to counter the debt, and hopefully one where the income of the asset vastly exceeds the costs of carrying and retiring that debt.
So I got to thinking that tracking changes in the Z1 national balance sheet might be an interesting exercise, especially in this upcoming campaign season. Which President did better at increasing America’s net wealth, which President’s did worse… questions like that. Since these figures include stock market holdings, housing values, tangible assets, debts (govt, household, corporate), pretty much the whole kit and kaboodle, it should be a pretty good test as to how our post-WW2 Presidents (and, perhaps, parties), have done in their number one job - increasing the wealth of the Nation.
And, being who I am, I put a spreadsheet together (link below) with the quarterly Fed data on our National Balance Sheet and compared how this metric grew under both Presidents and parties. And what I found was interesting:
… Adjusted for inflation, the national balance sheet of the US grew from $9.1 trillion in Truman’s re-election year (1949) to $78.2 trillion today (Q3, 2015)
… The President with the best year-over-year impact on the wealth of the country was Bill Clinton: total National Net Worth (NNW) increased by $18.8 trillion (ranked 2nd), with total % growth of 48.64% and annualized growth of 5.08% (beating out all other Presidents on this scale.)
… The worst Democrat at growing NNW, Jimmy Carter, increased NNW by 10.05% (2.42% annualized) - but that was still better than four Republicans: Nixon, Ford, Bush 1, and Bush 2.
… Surprisingly, Ronald Reagan sucked at increasing NNW compared to his reputation of economic wizardry. While overall NNW grew by 25% in his eight years (good enough for 4th place), annualized he comes to an anemic 2.85% (8th place, barely ahead of Carter).
… Not that we need any more proof, but Bush 2 was a horrible President. Easily the worst at growing the wealth of the nation, total NNW growth under Bush 2 was $641 billion, an annualized growth rate of .14% and overall growth of 1.09%. To put this in perspective, if you double W’s contribution to NNW and add $200 billion to that figure, you would still come up short to the 2nd-worst President at growing NNW - his father, GHWB (who had only 4 years to get a $1.465 trillion addition, compared to his son’s 8yrs and $641 billion).
… Obama’s doing pretty good. In sheer dollar terms, his administration has seen the greatest rise in national net worth since WW2 - over $19 trillion (30 X better than W). Overall, the 34% growth in NNW is the third best since WW2 and his 4.42% annualized growth ranks him better than every Republican excepting Eisenhower. Of course, these aren’t final figures for him - he still has 1 year and 1 quarter to complete.
… Eisenhower is the lone shining star in this regard for the Repubs. A 5.06% annualized growth rate is barely behind Clinton’s 5.08%, as is his 48.46% total growth. I like Ike!
… Comparing annualized growth in NNW, 5 of the top 6 occurred under Democratic administrations, while 5 of the bottom 6 occurred under Republican administrations.
So what do you think? Is this a valid way to measure the economic impact of Presidencies? Is it too broad a view, or too limited? What do you think about this type of measurement viz more traditional comparative metrics such as GDP, debt levels, etc? Does this say anything about the relative worth of the economic philosophies of the two parties? Any other thoughts?
Link to Fed Data: http://www.federalreserve.gov/datadownload/Choose.aspx?rel=Z1 I selected Chart B.1 Q Derivation of US Net Worth n.s.a. (whole series, from 1948-2015Q3).
Link to my spreadsheet (Google Drive, which removed much of my formatting (thanks! :rolleyes: ))
(If this isn’t debatey enough, feel free to move, of course.)