Loss of wealth may be slow to return
The Kansas City Star
It should come as no surprise to many people that the Great Recession and continuing bad economy has erased a lot of their wealth.
The Federal Reserve in a dipstick measure Monday of median family wealth found that in 2010 people sustained a 38.8 percent loss in net worth compared with 2007. The actual drop was from $126,400 in 2007 to $77,300 in 2010 with the plunging value that people had in their homes taking the greatest hit.
The stagnation — particularly for the middle class — is likely to linger for years as people take home less pay, demand for good and services remains pathetic and people are unable to move because they are either upside down in their homes, are facing foreclosure or they can’t get enough out of their property to make moving worthwhile.
Can you say deferred maintenance? That will be an ongoing outcome for the U.S. housing stock.
As the middle class hunkers down and stays put financially because of the losses people have suffered so will the economy remain in the doldrums. Let’s not even think about the 78 million baby boomers who had hoped to retire soon but now have to keep working — those age 50 and older who still have jobs — and how their loss of income has stymied the greatest spending generation from buying things.
That has to hurt the economy, too.