The Financial Base of Household Financial Wealth: Capital-to-Liability Rotation

Xin Huang

MPRA Paper from University Library of Munich, Germany

Abstract: We express U.S. household financial wealth as a Financial Base times a multiplier. The Financial Base is the underlying stably measured layer: business capital excluding structures, business mortgages, household liabilities, and the net government liability position. It exceeds half of household financial wealth throughout 1960–2025 and rises every year. Scaled by consumption, the Base yields Base coverage and reveals a capital-to-liability rotation: backing shifts away from business capital and toward liabilities, especially government liabilities after 2007. For the wealth-ranked bottom 90 percent (W90), the multiplier only partly offsets the financial-assets share’s downward trend, so rising W90 financial coverage is sustained by Base coverage.

Keywords: household financial wealth; Financial Accounts; household balance sheets; liabilities; public debt; wealth distribution; consumption coverage; macro-finance (search for similar items in EconPapers)
JEL-codes: D31 E21 E44 (search for similar items in EconPapers)
Date: 2026-04-27
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