The Federal Reserve Report issued last Friday disclosed that the household net worth in the U.S. fell for the first time in four quarters. The loss totaled nearly $1.5 trillion and represents a 2.8% drop in the overall wealth owned by consumers. Losses accumulated mostly from a decline in stocks, retirement savings, and mutual bonds.
CNN reported that the debt of consumers dropped, however another article in the New York Times suggested that the drop in debt should really be attributed to the amount of mortgage and consumer loans that have been defaulted on.
Prior to this setback, household net worth had regained some $6.2 trillion of the $17 trillion loss that occurred between 2007 and 2009. One economist suggested that while the drop in net worth seems grim, a slowly recovering labor market should help the households recoup.
From this article, it seems that most people are focusing on cutting back on unnecessary spending and are working on rebuilding their retirement savings. But for now the labor market is still troubled, undercutting these efforts.
When the economic downturn hit most people had a good chunk of their savings in the stock market in one form or another. Whether it be retirement accounts, or college savings accounts. The downturn in the stock market really affected these accounts and it will take them a long time to recover.
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