U.S. private financial assets hit 6.7x GDP

U.S. private-sector financial assets climbed to a record 6.7 times gross domestic product, the Kobeissi Letter reported, meaning the private sector holds nearly $7 in financial instruments for every $1 of annual output. The figure surpasses the prior peak of 6.3 times set in 2021.

The ratio compares the combined market value of stocks, bonds, bank deposits and other financial instruments held outside government to annual GDP. The Kobeissi Letter noted the ratio has more than doubled since the 1970s.

Portfolio data for high-net-worth investors show equity allocations rose to about 65% of total portfolios, the highest level since December 2021 and seven percentage points higher than in 2023. Cash holdings fell to roughly 10%, the lowest since September 2018, and bond exposure declined to about 18%.

By comparison, equity shares reached 66% at the 2021 peak and fell to a pandemic low of 54% in 2020. The long-term average equity allocation is around 57%.

The Kobeissi Letter wrote, “When financial assets outpace the real economy, the wealthy get richer, and workers get left behind.” The report also stated, “The wealth gap has never been wider.”

The report frames the asset-to-GDP ratio as a measure of how large private financial claims are relative to the real economy and notes that faster growth in financial assets than in wages and output directs gains to owners of capital. The Kobeissi Letter’s data focus on instruments held outside the public sector and do not include a demographic or geographic breakdown.