WASHINGTON — The brute force of the recession earlier this year turned back the clock on Americans’ personal wealth to 2004 and wiped out a staggering $1.3 trillion as home values shrank and investments withered.
Net worth, or the value of assets such as homes, checking accounts and investments minus debts like mortgages and credit cards, declined 2.6 percent in the first three months of the year, the Federal Reserve said Thursday.
Those months were some of the worst of the recession so far for job losses, and the stock market sank to its lowest point of the year in March. Since then, some signs suggest the economy is stabilizing.
Still, partly because of the carnage earlier in the recession, Americans are putting plans on hold until the economy improves.
"The bulk of consumers alive today have not experienced declines in wealth like this,” said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com. "They are already turning thrifty, and it will stay that way beyond the short term. This has been a significant learning experience.”
A good sign
Americans’ personal savings rate zoomed to 5.7 percent in April, the highest since 1995. And the amount in savings — $620.2 billion — was the most on record dating to January 1959.
One way to save: Maurice Boler, a management consultant, said he does many repairs himself on his Indianapolis home rather than pay someone else. "I just take a little bit longer,” said the 53-year-old father of four, three of whom live at home.
Even if the economy recovers and starts to thrive again, he said he probably won’t break out the credit cards again.
According to the Fed report, the biggest damage to wealth in the first quarter came from the sinking stock market. The value of Americans’ stock holdings dropped almost 6 percent from the final quarter of last year.
by the associated press
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