Board of Governors of the Federal Reserve System

The 2023Q4 release of the Distributional Financial Accounts corrects an error that affected the distribution of several assets in the 2022 Survey of Consumer Finances. Compared to the 2023Q3 DFA release, the estimates have been updated for money market mutual funds, deposits, U.S. government and municipal securities, and corporate equities and mutual funds. The effects on the distributions of household net worth are modest. The DFA also incorporates updates for the 2023Q4 release of the Financial Accounts. Notable changes that affect households include reclassifying nonmarketable Treasury securities from U.S. government and municipal securities to other loans and advances, and incorporating fraternal benefit societies into the insurance sector.

The 2023q3 release of the DFAs incorporates the newly released 2022 Survey of Consumer Finances (SCF), which was made public on October 18, 2023. Previous DFA releases were based on SCF data that ended in 2019, and thus each quarter of DFA data after 2019q3 was extrapolated. The DFA data are now based upon all the SCF data from 1989 through 2022. The quarters between 2019q3 and 2022q3 are now interpolated between the 2019 and 2022 SCFs, while the quarters after 2022q3 are extrapolated using temporal disaggregation models built from Financial Accounts data and other sources. Incorporating the 2022 SCF has two distinct effects on the DFAs. First, it provides direct evidence on how the wealth distribution has evolved since the 2019 SCF. Notably, this provides our first direct observation of the effects of the Covid-19 pandemic. Second, it provides new data that inform the temporal disaggregation methodology we use to interpolate between SCF surveys. The DFA public code has also been updated to incorporate the 2022 SCF.

The models underlying the Distributional Financial Accounts have undergone material updates for the 2023Q1 release. As we continue monitor the model performance, we removed indicator series that we determined were either redundant or were generating excess quarter-to-quarter variability. Compared to the prior release, the most notable effects of these changes are to decrease the wealth of lower wealth and income groups in recent quarters. The updated list of indicator series is available in the public version of the DFA code.

The two Financial Accounts instruments “Checkable deposits and currency” and “Time deposits and short-term investments” that appear separately in lines 6 and 7 of the household balance sheet (B.101.h) have been combined into a single instrument “Deposits” for the DFA. This instrument is visible in downloadable files that provide underlying detail, and like its predecessors, is included in “Other assets” for the visualization tool.

The breakdown of the top 1 percent of wealth distribution into the top 0.1 percent and the next 0.9 percent that was released in the _detail.csv files for the 2022Q1 publication is now available in the data visualization tool.

The pension entitlements instrument category has been segmented into three components that represent 1) the present value of future benefits households have earned through defined benefit pension plans, 2) the balance of defined contribution pension plan accounts, and 3) the value of annuities sold by life insurance companies to households. The economic characteristics of these components are distinct, and modeling them separately allows us to extract clearer signals from the relevant indicator series. In terms of Financial Accounts series, pension entitlements (FL153050005) has been replaced with defined benefit pension entitlements (FL574190043 + FL344190045 + FL224190043 + FL543150005 + FL263150005 - FL543050005 - FL543151905 - FL543150205), defined contribution pension entitlements (FL574090055 + FL344090055 + FL224090055.Q), and individual annuities (FL543150205). The three components are available separately in the _detail.csv beginning with the 2022Q2 DFA release. For simplicity in the data visualization tool, defined contribution plans and individual annuities are shown together and labeled defined contribution pension entitlements (which is the much larger of the two components), but are shown separately from defined benefit pension entitlements.

A public version of the DFA code is now available. It includes the code, input files, and instructions for users to recreate DFA results and is located on the Overview page at the following link: public version of the DFA code.

As of the 2022q1 release, the DFA separately calculates wealth for the top 0.1 percent of the wealth distribution and the next 0.9 percent of the wealth distribution. These two groups are summed to produce the top 1 percent in the data visualizations, but are available separately in the downloadable _detail.csv files. The new groups will be added to the data visualizations in a future release.