Chart: The Profile of a House With Negative Wealth
14% of all U.S. Households Have More Debts Than Assets
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
According to the New York Federal Reserve, 14% of the U.S. population lives in households that have “negative” wealth. In other words, these are households that have more debts piled up than assets, which puts their net worth in minus territory.
But what does a negative wealth household look like?
In today’s chart, we compare the data on negative wealth households with the data on their positive counterparts. There are some obvious and stark contrasts.
Positive vs. Negative Households
At the household level, the differences are probably what you would expect.
Negative wealth households bring in $39,077 in annual income, and only 19% of these families own their home. More than one-third (36%) of these mortgages are underwater.
Meanwhile, positive wealth households bring in $86,309 in annual income, and 75% of the families own their home. Only 4% of the mortgages are underwater.
The Head of the Household
For each of these households, we have data on the person that is the head of the household, or the breadwinner for each family.
In terms of education, there isn’t a big difference between the heads of negative and positive wealth households. Both seem to be similarly accomplished in terms of achieving college degrees (43% vs. 45%) and postgraduate degrees (12% vs. 15%).
However, there are greater differences when it comes to demographic profiles.
Negative wealth households have heads that are younger (43 vs. 51 years old), female (69% vs. 45%), and single (57% vs. 33%). There is also a higher proportion of minorities (24% vs. 17%) and single parents (20% vs. 7%) living in negative wealth households.
The Have and Have Nots
We also wanted to see the difference in composition of both assets and debts.
In this case, we are comparing the poorest third of those with negative wealth (-$47,500 to -$520,000) to those with positive wealth.
Households that are deep in the red have the majority of their wealth in the family car – automobiles make up 45% of the value of their total assets. Housing makes up 20% of their assets by value. For positive wealth households, it is the reverse: 40% of wealth is in the home, and 15% in vehicles.
The composition of debt is also very telling. Negative wealth households have a whopping 47% of debt in student loans, while positive houses have just 6%.
The Road to Recovery: Which Economies are Reopening?
We look at mobility rates as well as COVID-19 recovery rates for 41 economies, to see which countries are reopening for business.
The Road to Recovery: Which Economies are Reopening?
COVID-19 has brought the world to a halt—but after months of uncertainty, it seems that the situation is slowly taking a turn for the better.
Today’s chart measures the extent to which 41 major economies are reopening, by plotting two metrics for each country: the mobility rate and the COVID-19 recovery rate:
- Mobility Index
This refers to the change in activity around workplaces, subtracting activity around residences, measured as a percentage deviation from the baseline.
- COVID-19 Recovery Rate
The number of recovered cases in a country is measured as the percentage of total cases.
Data for the first measure comes from Google’s COVID-19 Community Mobility Reports, which relies on aggregated, anonymous location history data from individuals. Note that China does not show up in the graphic as the government bans Google services.
COVID-19 recovery rates rely on values from CoronaTracker, using aggregated information from multiple global and governmental databases such as WHO and CDC.
Reopening Economies, One Step at a Time
In general, the higher the mobility rate, the more economic activity this signifies. In most cases, mobility rate also correlates with a higher rate of recovered people in the population.
Here’s how these countries fare based on the above metrics.
|Country||Mobility Rate||Recovery Rate||Total Cases||Total Recovered|
Mobility data as of May 21, 2020 (Latest available). COVID-19 case data as of May 29, 2020.
In the main scatterplot visualization, we’ve taken things a step further, assigning these countries into four distinct quadrants:
1. High Mobility, High Recovery
High recovery rates are resulting in lifted restrictions for countries in this quadrant, and people are steadily returning to work.
New Zealand has earned praise for its early and effective pandemic response, allowing it to curtail the total number of cases. This has resulted in a 98% recovery rate, the highest of all countries. After almost 50 days of lockdown, the government is recommending a flexible four-day work week to boost the economy back up.
2. High Mobility, Low Recovery
Despite low COVID-19 related recoveries, mobility rates of countries in this quadrant remain higher than average. Some countries have loosened lockdown measures, while others did not have strict measures in place to begin with.
Brazil is an interesting case study to consider here. After deferring lockdown decisions to state and local levels, the country is now averaging the highest number of daily cases out of any country. On May 28th, for example, the country had 24,151 new cases and 1,067 new deaths.
3. Low Mobility, High Recovery
Countries in this quadrant are playing it safe, and holding off on reopening their economies until the population has fully recovered.
Italy, the once-epicenter for the crisis in Europe is understandably wary of cases rising back up to critical levels. As a result, it has opted to keep its activity to a minimum to try and boost the 65% recovery rate, even as it slowly emerges from over 10 weeks of lockdown.
4. Low Mobility, Low Recovery
Last but not least, people in these countries are cautiously remaining indoors as their governments continue to work on crisis response.
With a low 0.05% recovery rate, the United Kingdom has no immediate plans to reopen. A two-week lag time in reporting discharged patients from NHS services may also be contributing to this low number. Although new cases are leveling off, the country has the highest coronavirus-caused death toll across Europe.
The U.S. also sits in this quadrant with over 1.7 million cases and counting. Recently, some states have opted to ease restrictions on social and business activity, which could potentially result in case numbers climbing back up.
Over in Sweden, a controversial herd immunity strategy meant that the country continued business as usual amid the rest of Europe’s heightened regulations. Sweden’s COVID-19 recovery rate sits at only 13.9%, and the country’s -93% mobility rate implies that people have been taking their own precautions.
COVID-19’s Impact on the Future
It’s important to note that a “second wave” of new cases could upend plans to reopen economies. As countries reckon with these competing risks of health and economic activity, there is no clear answer around the right path to take.
COVID-19 is a catalyst for an entirely different future, but interestingly, it’s one that has been in the works for a while.
Without being melodramatic, COVID-19 is like the last nail in the coffin of globalization…The 2008-2009 crisis gave globalization a big hit, as did Brexit, as did the U.S.-China trade war, but COVID is taking it to a new level.
—Carmen Reinhart, incoming Chief Economist for the World Bank
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