SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
Data from the Fed showing the $4 trillion drop. (Photo: modifified screengrab, Federal Reserve)
American Net Worth Fell a Record $4 Trillion at End of 2018
It was "the single largest quarterly dollar drop on record."
Mar 07, 2019
Total American household net worth fell by $4 trillion at the end of 2018, sparking fears that the economy may be headed to a downturn.
Data from the Federal Reserve in its quarterly Flow of Funds report showed the decline. The drop was "the single largest quarterly dollar drop on record," according to a blog post on the data by The Big Picture's Barry Ritholtz.
"As a comparison, the U.S. bear market losses from 2007-2009 = $11 trillion dollars," wrote Ritholz.
\u201cThe $4T drop in Americans\u2019 net worth in Q4 was the single largest quarterly dollar drop on record.\u201d— Invictus (@Invictus) 1551983378
Reutersreported Thursday that Fed officials fear the decline could lead to a drop in consumer spending and a corresponding contraction of economic growth for the U.S.
Dips in retail spending at the end of 2018, the report said, added to the fear.
Not everyone assumes the worst, however.
According toCNN, the pinch will be felt disproportionately by the wealthy--leaving most households clear of the impact.
The decline does not reflect the average household's balance sheet, since stock ownership is concentrated among the wealthy. Only 18.7% of Americans own stock directly, while about half are invested in the market through through employer-sponsored retirement accounts, according to Pew.
U.S. News and World Report's Andrew Soergel, in an analysis, said that despite the loss of $4 trillion, that decline was based in "a woeful Wall Street run to close out 2018," and that the economy was more likely to continue to grow than not.
Trade uncertainty and anticipation of future Federal Reserve interest rate hikes and monetary policy tightening largely weighed on investors at the end of the year. And although those risks haven't exactly dissipated as the U.S. approaches the end of the first quarter, markets have largely stabilized, and consumers don't seem to be much the worse for wear.
Soergel also pointed to consumer confidence and credit debt as indicators of a growing economy: "credit increases are generally associated with a relatively optimistic consumer whose spending contributes to economic growth."
Total consumer credit debt, however, indicates there may be more trouble ahead, especially since it just hit a familiar amount: $4 trillion.
\u201cAmericans\u2019 collective debt surpasses $4 trillion for the first time. https://t.co/GKQmmBwi85\u201d— CNBC (@CNBC) 1551850273
Join Us: News for people demanding a better world
Common Dreams is powered by optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place. We're hundreds of thousands strong, but every single supporter makes the difference. Your contribution supports this bold media model—free, independent, and dedicated to reporting the facts every day. Stand with us in the fight for economic equality, social justice, human rights, and a more sustainable future. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Total American household net worth fell by $4 trillion at the end of 2018, sparking fears that the economy may be headed to a downturn.
Data from the Federal Reserve in its quarterly Flow of Funds report showed the decline. The drop was "the single largest quarterly dollar drop on record," according to a blog post on the data by The Big Picture's Barry Ritholtz.
"As a comparison, the U.S. bear market losses from 2007-2009 = $11 trillion dollars," wrote Ritholz.
\u201cThe $4T drop in Americans\u2019 net worth in Q4 was the single largest quarterly dollar drop on record.\u201d— Invictus (@Invictus) 1551983378
Reutersreported Thursday that Fed officials fear the decline could lead to a drop in consumer spending and a corresponding contraction of economic growth for the U.S.
Dips in retail spending at the end of 2018, the report said, added to the fear.
Not everyone assumes the worst, however.
According toCNN, the pinch will be felt disproportionately by the wealthy--leaving most households clear of the impact.
The decline does not reflect the average household's balance sheet, since stock ownership is concentrated among the wealthy. Only 18.7% of Americans own stock directly, while about half are invested in the market through through employer-sponsored retirement accounts, according to Pew.
U.S. News and World Report's Andrew Soergel, in an analysis, said that despite the loss of $4 trillion, that decline was based in "a woeful Wall Street run to close out 2018," and that the economy was more likely to continue to grow than not.
Trade uncertainty and anticipation of future Federal Reserve interest rate hikes and monetary policy tightening largely weighed on investors at the end of the year. And although those risks haven't exactly dissipated as the U.S. approaches the end of the first quarter, markets have largely stabilized, and consumers don't seem to be much the worse for wear.
Soergel also pointed to consumer confidence and credit debt as indicators of a growing economy: "credit increases are generally associated with a relatively optimistic consumer whose spending contributes to economic growth."
Total consumer credit debt, however, indicates there may be more trouble ahead, especially since it just hit a familiar amount: $4 trillion.
\u201cAmericans\u2019 collective debt surpasses $4 trillion for the first time. https://t.co/GKQmmBwi85\u201d— CNBC (@CNBC) 1551850273
Total American household net worth fell by $4 trillion at the end of 2018, sparking fears that the economy may be headed to a downturn.
Data from the Federal Reserve in its quarterly Flow of Funds report showed the decline. The drop was "the single largest quarterly dollar drop on record," according to a blog post on the data by The Big Picture's Barry Ritholtz.
"As a comparison, the U.S. bear market losses from 2007-2009 = $11 trillion dollars," wrote Ritholz.
\u201cThe $4T drop in Americans\u2019 net worth in Q4 was the single largest quarterly dollar drop on record.\u201d— Invictus (@Invictus) 1551983378
Reutersreported Thursday that Fed officials fear the decline could lead to a drop in consumer spending and a corresponding contraction of economic growth for the U.S.
Dips in retail spending at the end of 2018, the report said, added to the fear.
Not everyone assumes the worst, however.
According toCNN, the pinch will be felt disproportionately by the wealthy--leaving most households clear of the impact.
The decline does not reflect the average household's balance sheet, since stock ownership is concentrated among the wealthy. Only 18.7% of Americans own stock directly, while about half are invested in the market through through employer-sponsored retirement accounts, according to Pew.
U.S. News and World Report's Andrew Soergel, in an analysis, said that despite the loss of $4 trillion, that decline was based in "a woeful Wall Street run to close out 2018," and that the economy was more likely to continue to grow than not.
Trade uncertainty and anticipation of future Federal Reserve interest rate hikes and monetary policy tightening largely weighed on investors at the end of the year. And although those risks haven't exactly dissipated as the U.S. approaches the end of the first quarter, markets have largely stabilized, and consumers don't seem to be much the worse for wear.
Soergel also pointed to consumer confidence and credit debt as indicators of a growing economy: "credit increases are generally associated with a relatively optimistic consumer whose spending contributes to economic growth."
Total consumer credit debt, however, indicates there may be more trouble ahead, especially since it just hit a familiar amount: $4 trillion.
\u201cAmericans\u2019 collective debt surpasses $4 trillion for the first time. https://t.co/GKQmmBwi85\u201d— CNBC (@CNBC) 1551850273
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.