U.S. households have come a long way in regaining wealth lost in the Great Recession, but the pace of recovery remains uneven largely due to the housing market, say researchers from the St. Louis Federal Reserve.
By the third quarter of 2013, the average U.S. household had recovered 87 percent of the wealth it lost during the recession, which officially ended in June 2009. That is up from 79 percent at the end of the second quarter of 2013, according to an analysis by the Center for Household Financial Stability at the St. Louis Fed.
The Federal Reserve Board on Dec. 9 reported that household wealth had grown to an all-time high of $77.3 trillion by the end of the third quarter, but after adjusting that data for inflation and household growth, the St. Louis researchers found the average family’s purchasing power remained diminished.
William Emmons, senior economic adviser, and Bryan Noeth, policy analyst, pointed to several factors for the continued uneven recovery: Most of the increases in wealth have been in stocks and other financial assets that benefit the wealthiest 10 percent of Americans. The majority of U.S. households were heavily invested in the housing market, which has seen an uneven recovery since the third quarter of 2011, the market's low point.
The average value of a house and the rate of house-price appreciation have varied greatly by location. For example, the average house price in California appreciated about 32 percent through the end of the third quarter of 2013, compared to 11 percent in Missouri. In current-dollar terms, that translated to an average increase of more than $133,000 for a California homeowner, compared to about $18,000 for a Missouri homeowner. As a result, the potential impact on household spending is greater in some parts of the country than in others.
Note: This story originally included an incorrect number for the average house price increase for a California homeowner. That number was incorrect in the published report and news release from the St. Louis Federal Reserve.
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