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

Author

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  • Huang, Xin

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.

Suggested Citation

  • Huang, Xin, 2026. "The Financial Base of Household Financial Wealth: Capital-to-Liability Rotation," MPRA Paper 128890, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:128890
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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