Household Wealth Mostly Reclaimed since Economic Downturn

Household wealth has rebounded since the start of the current recession, according to a press release issued by the Federal Reserve Bank of St. Louis’ Center for Household Financial Stability.

According to the release, the average United States household has recovered 63 percent of the wealth it lost during the recession. The biggest gains occurred among families owning stocks and those owning a home. Among those benefiting from the $3 trillion increase in wealth nationwide, 63 percent found their wealth increasing thanks to upticks in the stock market.

Twenty-eight percent benefited from improvements in the real estate market, specifically in home values. Inflation eroded about 10 percent of the overall gains, but things remain positive for the majority of American families.

Household net worth was at its highest during the first quarter of 2007, reaching $582,299, according to In the Balance, published by the Federal Reserve of St. Louis. That amount, however, dipped to its lowest in the first quarter of 2009, losing more than $150,000 to a low of approximately $430,000. The rebound to today’s household wealth figure of $525,000 demonstrates that most households have reclaimed some, but not all, of the lost wealth due to the recession.

During this age of economic instability, higher education may be the key to unlocking a more secure future. The Cooperation for Enterprise Development reports that when the head of household has a college degree, the family is three times more likely to have a higher net worth and household wealth than families headed by someone with high school diploma.

A report from the United States Treasury indicates that the earnings gap today between those with a college degree and those with a high school degree is the greatest since 1915, another sign that higher education helps families earn more. The Federal Reserve report previously cited stats that this recovery is slower than hoped for, with many families slowly climbing their way out of the recession. Whether translated into employment opportunities or lifetime earnings averages, it pays to attain a college degree.

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