7. Summary

Our examination of household balance sheets shows that while many Americans lost wealth because of the Great Recession, younger, less-educated and African-American and Hispanic families lost the most. We also found that these subgroups had both higher-than-average concentrations of their wealth in housing and higher debt-to-asset ratios than less economically vulnerable groups. Thus, the very families most exposed to the economic fallout of a deep recession—fallout that came in the form of job loss or reduced income—possessed the weakest and riskiest balance-sheets.

We also presented evidence suggesting that it matters—for both family and economic growth outcomes—whether households have healthy or unhealthy balance sheets. Surveying the research, we presented evidence associating various levels of household balance sheet health with college access and completion, upward economic mobility, and financial stability. And the research suggests that both the asset-side wealth effect and the liability-side deleveraging effect appear to be important contributors to the overall household balance-sheet effects on spending and the economy.