Big Wipeout In US Household Net Wealth

The Federal Reserve today announced that U.S. household net worth fell by $1.3 trillion in the first quarter, which sounds like a pretty big deal.

However, sometimes percentages and graphs tell a better story when it comes to numbers like this.

For example, since its peak in the third quarter of 2007, household wealth has decreased by 21.6%, or more than a fifth, which is the most dramatic fall in the series since reporting began more than a half century ago.

And just to emphasize how big of an economic shock this wipeout has been, take a look at the accompanying chart, which plots quarterly values of the 12-month change in net worth as a percentage of nominal gross domestic product.

How anyone could think that the effects of so much wealth destruction in such a short period of time could be quickly overcome is beyond me.

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