American Wealth Still Down Since the Recession, Shows StudyBy: Sean Patterson - February 28, 2014
Though the U.S. was hit hard by the recession and the popped housing market bubble, generous infusions of government money have managed to begin turning the numbers around. Employment numbers are slowly rising, though income remains largely stagnant. Wall Street is back on its feet, though that won’t mean much for a majority of Americans. In all, economic indicators are pointing toward a recovering economy, though its beginning to look like such a recovery won’t resemble the pre-recession economy in the U.S.
A new study published this month in the journal Economics Letters is claiming that American household wealth is still far behind where it was in the mid-00s. Economists at Ohio State University estimate that average household income in the U.S. is still 14% down from its peak level of $398,620 in 2006.
This picture of American wealth conflicts with a Federal Reserve rosy report released last summer showing that American net worth had nearly recovered from the recession. The new study’s authors, however, criticize the Fed report for a variety of factors. They claim that factors such as not adjusting for inflation or population growth and including nonprofit wealth don’t provide a clear picture of the situation for actual Americans.
The new study used Consumer Finance Monthly survey data to determine its household wealth numbers. In addition to the wealth estimates, the study also shows how different demographic have been affected by the recession.
The poorest quarter of Americans, by having little wealth to lose, seem to already have recovered from the wealth-draining effects of the recession. Those most affected by the recession seem to be the middle-aged: Americans between the ages of 35 and 54 were measured as having average net worths in 2012 that were still 27% below what they had in 2006.
“What we’re seeing in these middle-aged people is very disheartening, because they are in what should be their peak earning years, when they should be accumulating assets before retirement,” said Randy Olsen, co-author of the study and an economist at Ohio State. “We might be seeing people who have lost their jobs and are forced to spend their assets because they can’t find work. Some of them may have given up looking.”