According to a new survey from the Federal Reserve Board, Americans lost as much as 23 percent of their wealth between 2007 and 2009. That may seem excessive, given that aggregate balance sheets declined only 11 percent between 1929 and 1934. But it jibes with quarterly household net worth numbers reason has been tracking from the putative beginning of the recession in mid-2007.
The results of that loss have been as ground-shifting as you might expect. According to the Fed study, titled Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009, more than 60 percent of families lost wealth during the period. They also lost economic mobility, with the rapid downward movement producing very little change in families' relative positions in wealth rankings. Relatively speaking, poor households suffered less than wealthier households.
The relationship between heavy indebtedness and poverty became stronger, as declining households steadily took on more leverage. But the "panic" we kept hearing about in 2008 was limited to Wall Street big shots and never really took hold among working Americans. "The majority of families passively accepted changes in portfolio shares driven by changes in asset prices," the study reports. Real estate was, and remains, the largest factor in the decline of wealth.
The post-2009 economy is a disturbing coda to the Fed report. Unemployment is higher than it was at the end of the period covered in Aftermath. And although saving rates have improved slightly, household net worth has been essentially flat since hitting rock bottom in the beginning of 2009. The one piece of good news: "In all wealth-change groups," the Fed notes, "most families found at least something positive in their experience."