With the close of 2025, the United States has run 50 consecutive years of annual trade deficits. Should we Americans despair? No.
As regular patrons of Cafe Hayek know, a common complaint about U.S. trade deficits is that these deficits – said to be ‘funded’ by a combination of Americans going further into debt to foreigners and Americans selling off assets to foreigners – drain wealth from America. As regular patrons of Cafe Hayek also know, this Cafe’s proprietor never tires of reminding people that, although some part of U.S. trade deficits might be caused Americans borrowing money from, or selling assets to, foreigners, rising U.S. trade deficits do not necessarily mean increasing American indebtedness or that we Americans are selling our assets to foreigners.
In earlier posts I’ve reported on data that belie the assertion that U.S. trade deficits necessarily drain wealth from the U.S. Here I report such data that are more complete – specifically, I count as part of Americans’ liabilities not only our private debt but also that portion of federal-, state-, and local-government debt for which the average American household is liable. Here are the conclusions, with all dollars converted into 2025$ using this personal-consumption-expenditure deflator.
In Q3 2025 (the latest date for which all relevant data are available), the average real net worth of U.S. households – taking account of all outstanding debt issued by federal, state, and local governments – was $1,031,144.
In 2001 (Q3), the quarter before China joined the World Trade Organization, the average real net worth of U.S. households was $583,989.
In 1993 (Q4), the quarter before NAFTA took effect, the average real net worth of U.S. households was $424,630.
At the end of 1975 – that is, in Q4 1975 – the last year the U.S. ran an annual trade surplus, the average real net worth of U.S. households was $339,074.
Therefore, in Q3 2025, the average real net worth of U.S. households was:
– 77% higher than it was in 2001
– 143% higher than it was in 1994
– 204% higher than it was in 1975.
Note that I do not include among households’ assets their share of the market value of government-owned assets. Were I to do so, I doubt that the percentage changes over the years in the average real net worth of U.S. households would be much different from the figures reported above.
The bottom line is that because wealth can – and, when markets are reasonably free, does – grow, a country that consistently runs trade deficits does not necessarily thereby lose wealth. Indeed, trade deficits – representing, as they do, net inflows into the country of global capital – can help to increase the wealth of the nation. The data in the U.S. are consistent with this optimistic take on U.S. trade deficits.
Details on how I calculated these figures are below the fold.
Q4 1975
Total nominal household net worth in 1975 (1975$): $5.76 trillion. (Information on how I arrived at $5.76 trillion is available here.)
Total number of households in 1975: 71,120,000
Per-household net worth in Q4 1975 (1975$): $80,990
Per-household net worth in Q4 1975 (2025$): $382,703 (not accounting for any government debt).
Total outstanding U.S. government debt in Q4 1975 (1975$): $437,305,000,000
Average per-household share of U.S. government debt in Q4 1975 (1975$): $6,149
Average per-household share of U.S. government debt in Q4 1975 (2025$): $29,056
Total outstanding state- and local-government debt in Q4 1975 (1975$): $219,359,000,000
Average per-household share of state- and local-government debt in Q4 1975 (1975$): $3,084
Average per-household share of state- and local-government debt in Q4 1975 (2025$): $14,573
Average real net worth of U.S. households in Q4 1975 in 2025$: $339,074 (accounting for all publicly held government debt).
………………………
Q4 1993
Total nominal household net worth in Q4 1993 (1993$): $25,519,071,000,000
Total number of households in 1993: 96,426,000
Per-household net worth in Q4 1993 (1993$): $264,649
Per-household net worth in Q4 1993 (2025$): $516,764 (not accounting for any government debt).
Total outstanding U.S. government debt in Q4 1993 (1993$): $3,382,197,000,000
Average per-household share of U.S. government debt in Q4 1993 (1993$): $35,075
Average per-household share of U.S. government debt in Q4 1993 (2025$): $68,489
Total outstanding state- and local-government debt in Q4 1993 (1993$): $1,167,641,000,000
Average per-household share of state- and local-government debt in Q4 1993 (1993$): $12,109
Average per-household share of state- and local-government debt in Q4 1993 (2025$): $23,645
Average real net worth of U.S. households in Q4 1993 in 2025$: $424,630 (accounting for all publicly held government debt).
………………………
Q3 2001
Total nominal household net worth in Q3 2001 (2001$): $42,112,482,000,000
Total number of households in 2001: 108,209,000
Per-household net worth in Q3 2001 (2001$): $389,177
Per-household net worth in Q3 2001 (2025$): $655,959 (not accounting for any government debt).
Total outstanding U.S. government debt in Q3 2001 (2001$): $3,338,707,000,000
Average per-household share of U.S. government debt in Q3 2001 (2001$): $30,854
Average per-household share of U.S. government debt in Q3 2001 (2025$): $52,005
Total outstanding state- and local-government debt in Q3 2001 (2001$): $1,281,690,000,000
Average per-household share of state- and local-government debt in Q3 2001 (2001$): $11,854
Average per-household share of state- and local-government debt in Q3 2001 (2025$): $19,965
Average real net worth of U.S. households in Q3 2001 in 2025$: $583,989 (accounting for all publicly held government debt).
………………………
Q3 2025 (latest date, as of March 19, 2026, for which all relevant data are available)
Total nominal household net worth in Q3 2025 (2025$): $172,913,999,000,000
Total number of households in 2025: 134,790,000
Per-household net worth in Q3 2025 (2025$) $1,282,840 (not accounting for any government debt).
Total outstanding U.S. government debt in Q3 2025 (2025$): $30,298,281,338,690
Average per-household share of U.S. government debt in Q3 2025 (2025$): $224,781
Total outstanding state- and local-government debt in Q3 2025 (2025$): $3,631,877,000,000
Average per-household share of state- and local-government debt in Q3 2025 (2025$): $26,945
Average real net worth of U.S. households in Q3 2025 in 2025$: $1,031,144 (accounting for all publicly held government debt).
