Given the dismal state of the economy in some sectors, recent revelations of the economic recession being over seem to ring hollow. Technically speaking, a recession ends when the economy stops shrinking. That said, economic sectors like employment, household prosperity and real estate are nevertheless depressed. The value of assets minus the amount of owed debt is how household wealth, or net worth, is determined. For instance, the value of a home an individual or family owns or investments held are assets. From the money value of those assets, you subtract the total amount of debt, like charge cards or personal loans. It’s not exactly advanced calculus. Net worth is almost at an all time low.
Family wealth plummeted
The last few years have taken a toll on the economy, including household wealth. The summer has not been good to many people. Family wealth took a significant tumble. The Federal Reserve, according to CNN, recently reported that after all debts, the net worth among all Americans had dropped 2.8 percent. That’s a small percentage, but the dollar amount is not. It amounts to $1.5 trillion of instant cash gone. The bulk of the shrinking dollar value was lost in the stock market. Mutual funds and retirement savings accounts were also negatively affected. Over the summer, the bulk of losses were from individual stocks, which declined by $912 billion.
Real estate is really a plucky sector
Employment is down, however real estate was where the hugest losses occurred. Real estate, despite the bottom having practically fallen out, is slowly working its way back up. There is really just a little more value in property overall. Housing added $46 billion over the summer. Given, the gain is only .3 percent, however a gain nonetheless. That said, it does not make up for the losses. Between 2007 and 2009, housing as an industry lost $17 trillion. Some areas that nevertheless need additional cash are certainly employment and real estate. Nevertheless, it appears the cash advanced from the government has done little at all.
More tortoise than hare
Some good news has come out of all this, though. All is not lost, by a long shot. As outlined by USA Today, stocks are already rebounding and regaining value. A double dip recession does not seem likely, as slow but steady recovery is expected.
Further reading
CNN
money.cnn.com/2010/09/17/news/economy/household_net_worth/index.htm
USA Today
usatoday.com/money/economy/2010-09-17-net-worth_N.htm
