The recession crushed the wealth of many households. But numbers show that these losses have at least stopped in recent years. Host Mary Walden poses this question to her husband, NC State Economist Dr. Mike Walden: I suspect that like income, changes in wealth vary per different groups of households. Am I correct?
Mary, you are correct. But, first let’s be clear on what we mean by wealth. Wealth or another term, “net worth,” is the difference between the value of your investments and the value of your debt. And, that difference dropped by $40,000 dollars for the average household during the recession. A major loss, a lot of it obviously tied to the housing market. Now, we have had a slight rebound in wealth. But what we’re seeing is that rebound is not evenly spread across households. Higher income households who did lose more wealth in dollar terms are seeing a bigger rebound in their wealth than lower income households, who although they did not lose as much on a dollar basis, lost a much bigger percentage of their wealth during the recession. The net result of this is like income inequality, which is getting bigger. We’re also seeing wealth inequality getting bigger and obviously this causes concern for many economists.