The Federal Reserve today announced that U.S. household net worth fell by $1.3 trillion in the first quarter, which sounds like a pretty big deal.
However, sometimes percentages and graphs tell a better story when it comes to numbers like this.
For example, since its peak in the third quarter of 2007, household wealth has decreased by 21.6%, or more than a fifth, which is the most dramatic fall in the series since reporting began more than a half century ago.
And just to emphasize how big of an economic shock this wipeout has been, take a look at the accompanying chart, which plots quarterly values of the 12-month change in net worth as a percentage of nominal gross domestic product.
How anyone could think that the effects of so much wealth destruction in such a short period of time could be quickly overcome is beyond me.
That's a 2,5% decline during the worst period of the financial collapse, right? Not that much after all...
Posted by: Paolo | June 12, 2009 at 04:10 AM
It would be interesting to see the decline broken down into categories of household wealth 1,000K. I would think the percentage decline of the lower two categories would be far greater than in the other 3 and would have a greater impact on spending and an economic rebound. Does anyone have that info?
Posted by: Rick | June 12, 2009 at 05:57 AM