American households have regained less than half of the wealth lost during the Great Recession (2007 to 2009), according to a new analysis from the St. Louis Federal Reserve.
The researched found that U.S. households accumulated net worth totaling $66 trillion at the end of last year, down 55 per cent from the peak in 2007 when adjusted for inflation and population growth.
The report found that “younger, less-educated and African-American and Hispanic families lost the most.” These demographics suffered for various reasons, including high levels of debt, exposure to hard-hit occupations like construction, high concentrations of wealth in housing — which got destroyed in the crash.
Although household have been rebuilding their savings and paying down their debts in recent years, the recovery has been far from evenly distributed since it was largely tied to stocks.
From the report:
Of the total recovery of $14.7 trillion between the first quarter of 2009 and the fourth quarter of 2012, $9.1 trillion, or 62 per cent, of the gain was due to higher stock-market wealth. Stock wealth is unevenly held, with the vast majority of stocks owned by a relatively small number of wealthy families. Thus, most families have recovered much less than the average amount.
Therefore, the report states, any conclusion that “the financial damage of the crisis and recession largely has been repaired is not justified.”