Macro monitor · Federal Reserve data · updated quarterly
A portfolio is not cash. This page tracks how large US household wealth has become relative to M2, the money that actually settles transactions. When claims grow much faster than money, the system leans harder on confidence, refinancing, and the Fed.
Household equity / M2 · Q1 2026
Every dollar of M2 backs $2.86 of household equity claims. The ratio just posted its first meaningful pullback since 2022: equity holdings fell about $1.8T in the first quarter while M2 kept growing.
Year-end observations plus the latest quarter. The dashed line at 250% marks where equity claims start to look stretched relative to M2.
Money settles transactions. Wealth is a claim on future money. Stocks, real estate, and pension assets can all be valuable, but they cannot all become cash at the same price at the same time. The ratio asks a narrow question: how much marked wealth sits on top of each dollar of M2?
Ray Dalio's framing is the reason to watch it. Bubbles become dangerous when people need money and have to sell wealth to get it. The pressure point is not the existence of wealth; it is the scramble for settlement money when many holders want liquidity at once. This is a fragility gauge, not a crash clock. High readings do not predict dates. They raise the cost of being wrong about liquidity.
The ratio spent 2024 and 2025 climbing into record territory and touched 298% at year-end 2025, above the dot-com peak on this series. In Q1 2026 it eased to 285.6%. Both moving parts helped: household equity holdings fell from $66.6T to $64.8T, and M2 grew to $22.7T. Net worth relative to M2 told the same story, slipping from 778% to 767%.
One quarter is not a trend. The ratio also pulled back in 2022 and then made new highs. What matters is which path the normalization takes: money supply catching up to claims is the gentle route, asset prices falling to meet money is the painful one. Q1 had a little of both.
| Equity / M2 | Reading |
|---|---|
| Below 150% | Plenty of money relative to claims |
| 150 to 250% | Normal expansion territory |
| 250 to 300% | Fragile; liquidity shocks matter more |
| Above 300% | Very stretched by this lens |
These bands are heuristics from the historical series, not laws. Index funds, retirement accounts, and foreign ownership of US assets have all shifted the modern baseline higher than the 1980s norm.
The equity series is household and nonprofit holdings from the Fed's Z.1 release, not total market capitalization, so broader market-cap-to-M2 charts show different peaks. M2 changed definition in May 2020. Net worth includes illiquid assets, especially housing and pensions. And the ratio can stay high for years; it is a lens for liquidity risk, not proof that a crash is near.