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Contribution to Book
How much wealth was destroyed in the Great Recession?
The Great Recession
  • Edward N. WOLFF, New York University
  • Lindsay A. OWENS, Standford University
  • Beste Esra BURAK HO, Standford University
Document Type
Book chapter
Publication Date
1-1-2011
Publisher
Russell Sage Foundation
Abstract
The topic of the chapter is the distribution of wealth. As expected in a ''financial recession," the destruction of wealth has been profound, as high-net-worth individuals (those with over $1 million in investable assets) lost $2.6 trillion in wealth between 2007 and 2008. Of course this destruction was also experienced by the middle class. By the end of 2009,16.4 percent of all homeowners were "underwater" with their mortgages, meaning that they had negative net home equity, and 14.1 percent of American home-owners were delinquent or soon to be delinquent on their mortgage payments. The share of households with negative net worth also increased to 24.8 percent by the end of 2009. There was clearly much pain to be spread around, but the question arises as to whether certain groups experienced losses disproportionately. The rich lost wealth, especially early in the recession, but their wealth has been partly recouped as the stock market has recovered. The middle class, whose wealth tends to consist mostly of housing and retirement accounts, have suffered as well and may not rebound as quickly. Some of the biggest relative losses have occurred among the disadvantaged. Indeed, African Americans and Hispanics are especially likely to be underwater with their mortgages, and poor and minority neighborhoods are experiencing the highest probabilities of foreclosure.
Publisher Statement
ISBN of source publication: 9780871544216
Citation Information
Wolff, E. N., Owens, L. A., & Burak, E. (2011). How much wealth was destroyed in the Great Recession? In D. B. Grusky, B. Western, & C. Wimer (Eds.), The Great Recession (pp. 127-158). New York: Russell Sage Foundation.