Great Recession’s bite lives on
WASHINGTON (AP) – The average U.S. household has a long way to go to recover the wealth it lost to the Great Recession, a report by the Federal Reserve Bank of St. Louis concluded Thursday.
The typical household has regained less than half its wealth, the analysis found. A separate Federal Reserve report in March calculated that Americans as a whole had regained 91 percent of their losses.
Household wealth plunged $16 trillion from the third quarter of 2007 through the first quarter of 2009. By the final three months of 2012, American households as a group had regained $14.7 trillion.
Yet once those figures are adjusted for inflation and averaged across the U.S. population, the picture doesn’t look so bright: The average household has recovered only 45 percent of its wealth, the St. Louis Fed concluded.
That suggests that consumer spending could remain modest as many Americans try to rebuild their wealth by saving more and paying off debts.
The number of U.S. households grew 3.8 million to 115 million from the third quarter of 2007 through the final three months of last year, the report said. As a result, the rebound in wealth has been spread across more people and reduced the average wealth for each household.
In addition, though inflation has averaged just 2 percent over the past five years, it’s eroded some of the purchasing power of Americans’ regained wealth.
The St. Louis Fed’s analysis noted that the rebound in wealth hasn’t been equally distributed.