Household Balance Sheet Update and Rebased Forecast—2022

A year has passed since the publication of our 2021 Household Balance Sheet Report. As is our tradition, in the years in which no new edition of the report is published (such as this year), we issue an update and rebased forecast. This rebased set incorporates the additional year of data (year-end 2021) and the resulting forecast recalculation for the nine years remaining in our baseline forecast presented in our 2021 study.

After record inflows supported by fiscal and monetary policy changes during the pandemic, our original forecast presented in the 2021 Household Balance Sheet Report assumed that total assets would invariably revert back to historical means within the forecast period. The shift into market sensitive assets in 2021 may have inflated asset valuations even further, but an adjustment is underway as markets correct and interest rates increase.

The prevailing sentiment at Investor Economics is that any outstanding volatility, up or down, is a short-term phenomenon. The strong growth in financial assets over 2021 was almost exclusively due to market sensitive assets; likewise, any reversion beyond the mean would be a short term event.