Many Americans are far from regaining the wealth they lost when the economy tanked.
The Great Recession cost Americans $16 trillion in wealth, and the average household has recaptured only about 45 percent of what it lost.
That’s the finding of a new report from the Federal Reserve, which accounted for inflation and population growth. It also looked at demographics, which highlight surprising things about the recovery.
For one thing, 91 percent of American wealth lost has already been rebuilt, the Fed says. It’s just in different hands.
“Of the total recovery of $14.7 trillion between the first quarter of 2009 and the fourth quarter of 2012, 62 percent of the gain was due to higher stock market wealth,” the report says, “with the vast majority of stocks owned by a relatively small number of wealthy families.”
The people hit hardest were young, not well-educated, and not white, the report shows. When broken down by age, people in the under-40 group lost an average of nearly 45 percent of their net worth. By race, African-Americans and Hispanics lost more than 35 percent. By education, high school dropouts lost a quarter of their net worth. The average loss across all demographics was about 15 percent.
For some, there has been no recovery. Says The Washington Post:
[Fed economist William] Emmons said many families have not experienced any recovery — or are even still losing wealth. Young Americans, those with few skills or are unemployed may not have been able to rebuild any wealth. He noted that though the number of foreclosures has dropped significantly, it is still more than double the pre-crisis amount.
Those people were in a more vulnerable position going into the crisis, and not necessarily through any fault of their own. “Our research suggests that both economic vulnerability and risky financial choices may stem from one or more common causes, including low levels of human capital [or earning potential], relative youth and inexperience, as well as the legacy of discrimination in education, employment, housing and credit markets,” the report says.