This week, the Federal Reserve released its Survey of Consumer Finances showing the depth of the recession’s impact on family finances. The numbers are a tough and brutal snapshot of the financial crisis and housing bubble that President Obama inherited. Based on other, more frequent data, the entire decline in household wealth took place before President Obama came into office and it has risen every year since he came into office. Nevertheless, these data show that wealth still has not fully recovered from the worst recession since the Great Depression and reinforces how much more work we have to do.
The Federal Reserve conducts the Survey of Consumer Finances every three years so the latest numbers compare family finances in 2007 and 2010. Although the Survey of Consumer Finance is a useful gauge of household finances, it does not record exactly when the changes took place nor does it provide the most timely data. To look more deeply into these questions, this blog post uses another Federal Reserve survey—the Flow of Funds—which has the advantage of providing quarterly numbers and covering the period up through the first quarter of 2012. These data show:
According to Flow of Funds data, gains in assets like mutual funds, deposits, and stabilization in home equity drove the increase:
- Building on the stock market recovery, mutual fund assets have increased more than 65 percent since President Obama took office, reaching their highest level on record in nominal terms, above their pre-crisis peak.
- Deposits are up around 7 percent since President Obama took office.
- Owner’s equity in household real estate has held steady since President Obama took office, after falling more than 50 percent from their peak in 2006 through the first quarter of 2009.
These Flow of Funds data are consistent with other measures showing that important components of household wealth have increased since the beginning of 2009:
Even with these solid gains, household wealth has still not fully recovered from its large fall during the height of the financial crisis in 2008. We need to do everything within our power to help more families regain the wealth they have lost and to give more opportunities to larger circle of families to gain the level of net worth they need to provide security and opportunity for their families, which is why the President remains focused on creating jobs, strengthening the housing market, and improving the overall economy.