Wealth Recovery Still Not Complete, Remains Uneven Across Families and Locations

William R. Emmons , Bryan J. Noeth

The Federal Reserve's latest snapshot of the aggregated balance sheet of all U.S. households showed that the recovery of household wealth has come a long way but remains incomplete.[1] Despite a $21 trillion increase in household asset values since the low point in early 2009 - including $7.9 trillion during the past four quarters - the average household's inflation-adjusted net worth at the end of this year's third quarter stood at $626,800, almost 2 percent below its pre-recession peak of $645,100 in early 2007. Measured in terms of the wealth decline suffered between the 2007 peak and the early 2009 trough level (a loss of about $142,900), this gain of $124,600 means the average household's recovery of inflation-adjusted wealth to date was only 87 percent complete as of the end of the third quarter.

As noted in the previous issue of In the Balance, the wealth recovery is proceeding at a very uneven pace across different families and in different parts of the country.[2] For example, the housing rebound has been much stronger in some states (such as California) than in others (such as Missouri). There are two aspects to this housing-wealth recovery. First, the average value of a house differs greatly depending on its location. As seen in the table, it was approximately $554,000 in California versus about $180,000 in Missouri at the end of the third quarter of 2013.[3]

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