American households have rebuilt less than half of the wealth lost during the recession, according to a new analysis from the Federal Reserve, hampering the country’s economic recovery.
The research from the St. Louis Fed shows that households had accumulated net worth totaling $66 trillion at the end of last year. After adjusting for inflation and population growth, the bank found that meant families on average have only made up 45 percent of the decline in their net worth since the peak of the boom in 2007.
In addition, most of the improvement was due to gains in the stock market, according to the report, primarily benefiting wealthy families. That means the recovery for most households was even weaker.
“A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the report stated.
The research focuses on the role that household wealth had in amplifying the impact of the recession. Though economists and policymakers have paid most attention to problems with the job market and wages, the report argues that swings in household balance sheets — which include home values, stock prices and savings accounts — were critical in determining which families weathered the economic storm and which got swept away.