Trillions Lost in Household Wealth

No wonder we are in the worst economic recession of the past 50 years – probably the worst recession in our generation. 

The Federal Reserve Bank just reported that households lost a cumulative $5.1 trillion, almost 10 percent of wealth in the last three months of 2008 – the last three months alone. Yikes! If you think that’s bad, it just gets worse – for the entire calendar year of 2008 $11.1 trillion was lost. We haven’t had that must loss in wealth since the dot com bubble in 2002.

The sad but interesting part of this is most of the recently lost wealth was in financial assets, which includes stocks. Real estate declines were less than stock declines.  

Of course no one is in the mood to spend when your wealth in real estate and stocks is deteriorating by the day.  I can remember my grandparents (who lived through the great depression) reused everything – nothing went to waste. In 30 years, our children might be speaking of our generation in the same way if this recession is a long, deep one.