Household wealth took a big hit during the recession and has struggled to come back. Many economists think a rebound in household wealth is a key to a robust economic recovery. N.C. State University economist Mike Walden takes a look at where we stand today on household wealth.
“Well …, like most of the economic statistics that we look at, the numbers are back. They’re improved over the last couple of years. But we’re not totally back to where we were pre-recession. For example, we are up $9 trillion. Household wealth is up $9 trillion over the last couple of years since the recession bottomed out. But we’re still down $4 trillion from the pre-recessionary peak.
“Now financial wealth is all the way back. And, for example, if you look at areas like the stock market, you can see that the stock market, on trend, has been on a roll for the last couple of years. Real estate wealth, however — the wealth, for example, that most people have in their homes, if they’re a homeowner — has still been lagging.
“Now the trend in wealth is very, very important because it does impact consumer’s spending. Higher wealth tends to mean that consumers will spend more. And of course consumer spending does drive the economy. The other thing to note here on the wealth numbers … is households have been very diligent in paying down on their debt in order to boost their wealth. In fact, household debt is down by almost $1 trillion dollars over the last five years.”