The Federal Reserve recently released new household data in two related data sources that tell an encouraging story about household wealth and its distribution. Household wealth has substantially increased during the pandemic – from December 2019 to December 2023. All income groups have seen similar rates of change in their wealth. Those gains reflect broad improvements in housing and financial wealth. This is a far cry from the Great Recession of 2007 to 2009 when wealth for the bottom 60% of households was still below its pre-recession levels four years after the recession started.
Wealth – the difference between what people own and what they owe – provides a financial cushion in an emergency and allows families to invest in their future or look forward to a more secure retirement. It is highly susceptible to declines for lower-income households during a recession since those households typically experience higher levels of unemployment and drops in wages and thus need to rely more heavily on their savings.
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