New Federal Reserve data detail how the recession affected consumer finances
The average wealth of U.S. households -- the value of their homes, stocks and all other assets -- fell to $481,000 in mid-2009 from $598,000 in mid-2007, according to a new Federal Reserve survey that details how the Great Recession affected consumer finances.
Families living in California and the rest of the Western United States took the biggest and broadest hit, with 67.5% of households in that region seeing their wealth drop, compared with 62.5% for the nation overall. The median decline in wealth for households in the West was 27.7%, well above the 18.1% national average and nearly triple the 9.5% decrease for families in the Northeast.
While it's widely known that the recession slammed household wealth and that the housing market in the West took the hardest hits, the unusual Fed survey released Thursday attempted to quantify the damage. The central bank does a broad consumer finance survey of about 4,000 households every three years. But to gauge the effect of the recession, the Fed in mid-2009 began re-interviewing the same households it had surveyed in 2007.
The new data compare the state of those households just before the recession officially hit in December 2007 with how they were faring in the second half of 2009, after it technically ended.
While more than two-thirds of households saw their wealth fall, "a sizable fraction of households experienced gains in wealth, while some families’ financial situation changed little," the Fed said in its 37-page report, titled "Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009."
The median household saw its wealth decline 18% during that period, but most well-off families actually increased their wealth. Those in the top quarter of households saw their overall net worth go up by about 27%, the survey found. Still, a greater percentage of wealthy households saw a decline in their net worth, largely because they were more likely to own stock.
About 77% of households in the 90th percentile or above saw their net worth decrease, compared with about half of households in the the bottom quarter.
-- Jim Puzzanghera