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By Catholic Online (NEWS CONSORTIUM)

6/2/2013 (2 years ago)

Catholic Online (www.catholic.org)

Wealth of most Americans down 55 percent since 2008 downturn

While the United States economy is on the upswing, with all-time highs on Wall Street and home prices, for many Americans, it's a case of a little, too late. A new report says that the average U.S. household has recovered only 45 percent of the wealth they lost during the recession. There are conflicting reports - painting a very complex picture of the finances of the majority of Americans.

The report found that members of the households that suffered the most financially were less educated, relatively young or black or Hispanic, or some combination of these factors. These families typically have low savings and high debt, with much of their wealth based on housing.

The report found that members of the households that suffered the most financially were less educated, relatively young or black or Hispanic, or some combination of these factors. These families typically have low savings and high debt, with much of their wealth based on housing.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

6/2/2013 (2 years ago)

Published in Business & Economics

Keywords: recession, welath, debt, savings, stock market, housing


LOS ANGELES, CA (Catholic Online) - According to a report released from the Federal Reserve Bank of St. Louis, the current good news heard in the media isn't adjusted for inflation, population growth or the nature of the wealth.

While a report by the Fed earlier this year calculated Americans as a whole had regained 91 percent of their losses. The writers of that report point out that the earlier number is based on aggregate household-net-worth data.

However - much of recovery in net worth is because of the stock market, which means most of the improvement has been a boon only to wealthy families.

"Clearly, the 91 percent recovery of wealth losses portrayed by the aggregate nominal measure paints a different picture than the 45 percent recovery of wealth losses indicated by the average inflation-adjusted household measure," the report said.

"Considering the uneven recovery of wealth across households, a conclusion that the financial damage of the crisis and recession largely has been repaired is not justified," the researchers said.

Household wealth plunged a vertiginous $16 trillion from the top of the real estate bubble in the third quarter of 2007 all the way crashing to the bottom of the bust in the first quarter of 2009. In the last three months of 2012, American households as a group had regained $14.7 trillion.

Almost two-thirds of the increase in aggregate household wealth is due to rising stock prices, the report states, which has disproportionately benefited the richest households. About 80 percent of stocks are held by the wealthiest 10 percent of the population.

Much of the total wealth of middle and lower-income households is based on home values, not stocks. Even though home prices have increased nearly 11 percent in the past year, they remain about 30 percent below their peak.

On the positive side, Americans continue to pay down their debt. Even here, the report says debt levels and problems with rebuilding net worth are the main reasons the recovery has been so slow. There was an awful lot of robbing Peter to pay Paul. The people who suffered the worst of the recession through job losses and reduced income were the ones who had borrowed the most.

The report found that members of the households that suffered the most financially were less educated, relatively young or black or Hispanic, or some combination of these factors. These families typically have low savings and high debt, with much of their wealth based on housing.

"While many Americans lost wealth during the Great Recession, younger, less-educated and nonwhite families lost the greatest percentage of their wealth," James Bullard, president of the St. Louis Fed, said in a statement. "Household deleveraging, or paying down debt, has played a key role in the recent recession and the slow recovery."

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Pope Francis: end world hunger through 'Prayer and Action'


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Pope Francis Prayer Intentions for July 2015
Universal:
That political responsibility may be lived at all levels as a high form of charity.
Evangelization: That, amid social inequalities, Latin American Christians may bear witness to love for the poor and contribute to a more fraternal society.



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