The Federal Reserve has been tracking household balance sheet data since 1952.

Every quarter, they provide information on the total financial assets and liabilities of households and nonprofit organizations.

While this data doesn’t precisely predict the direction of the economy, it can offer insights into the financial position of Americans for future trends.

As of June 30th this year, American households have reached record-high levels of assets, liabilities, and net worth:

Assets: $174.4 trillion

Liabilities: $20.1 trillion

Net Worth: $154.3 trillion

Here is a breakdown of assets by financial and nonfinancial categories:

Financial Assets: approximately two-thirds

Nonfinancial Assets: approximately one-third

The majority of household debt consists of mortgages, accounting for around 64% of total liabilities. Consumer credit, including car loans, credit cards, student loans, and consumer loans, makes up 25% of total liabilities. Other types of debt contribute slightly over 11% to the overall liabilities.

Over the decades, the debt-to-assets ratio has remained relatively stable, with an average of about 13%. In 2009, during the financial crisis, it reached as high as 20%, and in 1952, before the surge in consumer credit, it was as low as 6%.

Examining liabilities in relation to disposable personal income provides additional perspective:

Due to excessive debt leading up to the 2008 financial crisis, the debt burden was significant. However, it has since decreased to levels seen in 2000.

While these long-term trends provide historical insights, analyzing changes during recent cycles can help explain economic environments.

For example, from 2001 to the third quarter of 2007, total financial assets grew by 64%, while total liabilities surged by 94%. This increase in debt played a significant role in the 2008 crisis.

Comparing asset and liability growth since the Great Financial Crisis, assets have grown by 136%, while liabilities have risen by only 40%. This has resulted in a significant increase in net worth since the crisis.

Even during the recent pandemic cycle, asset growth has outpaced debt growth. From the end of 2019, financial assets have climbed 31%, while liabilities have risen by 21%. The current situation is quite different from the conditions preceding the 2008 crisis.

However, this doesn’t mean households can indefinitely prevent a recession. While consumer credit is currently low, it may eventually increase as the spending boom from the pandemic subsides. Additionally, the stock market and housing market cannot continue their rapid growth forever. Thus, households should prepare for some leveling off in the future.

Fortunately, households currently possess a healthy degree of financial security. Home equity has significantly increased from $19.4 trillion at the end of 2019 to over $31 trillion. Collectively, household finances are in decent shape.

Although unforeseen events can impact the economy, consumers are currently well-prepared for a slowdown. Unless the economy experiences significant overheating, U.S. household balance sheets are in a good position to weather a mild recession. In fact, consumers might even be the driving force in making the next recession less severe.

For more information, read: How Rich Are the Baby Boomers?

Note: There are approximately 132 million households in the U.S. according to the latest Census estimate, providing perspective on these numbers.

Note 2: The dot-com bust in the stock market was more severe than the impact on the economy. The recession lasted for only 8 months, with a 0.3% reduction in GDP. The unemployment rate did rise to 6.3% by the summer of 2003 but returned to 4.5% three years later.