For 45 years - until roughly 1994 - the average wealth-to-income of American households had held steady around 4.9x. Then the stock bubbles started, first under Greenspan, then Bernanke, and now, Yellen and really every other central bank, and as a result as of Q1 2017 for the first time in US history, household wealth reached a point where it is over 6.6 times larger than inflation-adjusted household disposable income in America.
As we showed earlier in the day, the surge in wealth, driven almost entirely by new all time highs in the S&P, pushed this measure of relative exuberance (think of it as the country"s price-to-earnings ratio) above the housing boom peak of mid-2000s and well above the dot-com bubble driven highs of the last 1990s.
As Alliance Bernstein economist Joe Carson recently wrote in a note: "Economic and financial history do not always repeat, but sometimes they do."
The logical next question is how much higher can this disconnect go, before something snaps?
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