The destruction caused by the bursting of the housing bubble and the subsequent Great Recession continues to wreck havoc on our economy, communities, families and workers. Last month, the Federal Reserve released 2010 data from its Survey of Consumer Finances (SCF). This triennial survey, one of the best sources on net worth (assets minus liabilities) for the U.S., just happened to coincide with the recession.
The 2007 SCF reflected the state of wealth at the last economic peak — as the recession officially began in December of that year. With the newly released 2010 data it is possible to assess where we were three years later. It isn’t a pretty picture. As the chart shows, over the 2007-2010 time frame typical families lost 39% of their wealth which put them back to 1992 levels (inflation adjusted).
To see what happened to the richest amongst us, the chart also shows the 2007 to 2010 change in wealth for the Forbes 400 and also for the six Waltons of Wal-Mart who are on the list. The decline was 16% for the cumulative wealth of everyone on the Forbes 400 list. However, the wealth of the Walton heirs grew by 22%. During a period of massive destruction of wealth for typical families and even when their peers lost some ground, the Waltons were able to cash in. It seems what has been bad for the vast majority of Americans has been very good for the Waltons. As the company’s then CFO said right before the start of the great recession “Tough times are actually a good time for Wal-Mart” ( cite ). Looks like he was right.
Last December I put the wealth held by those on the Forbes 400 list and the subset of Waltons into some perspective ( here ). In 2007 the total wealth of the Forbes 400 equaled the wealth of the bottom 50% of families in the U.S; wealth held by the Walton-six was equal to that of the bottom 30.5%. In 2010, the cumulative wealth of the Top 400 ($1.35 trillion) and the share held by the Waltons ($89.5 billion) equaled the entire bottom 56% and 41.5% of families, respectively. The ever increasing concentration of wealth at the top continued over this period.
Given that the stock market, corporate profits and CEO bonuses have surpassed pre-recessionary levels, it is likely the wealthy have turned the tide in their favor even more so of late. Recent research ( cite ) showed that income gains from the 2009/2010 recovery went overwhelmingly to the rich. Income for the Top 1% grew by 11.6% while the rest of the 99-percenters gained just 0.2%. In other words, 93% of all income gains went to the Top 1%!
On the other hand, the outlook isn’t as optimistic for typical families who have (had) most of their wealth in their homes. Today, more than one in five mortgages is still under water, foreclosure rates remain high, wages for most workers are at best stagnant, and unemployment has been stuck around 8.2% for the last six months. Until the labor market has momentous improvements it will be impossible for most workers and their families to regain, let alone transcend, the lower rung on the economic ladder they found themselves on post-Great Recession.