Tuesday, December 20, 2011

Household Wealth To Income Ratio Back To Long Term Trend After Pre-Recession Peak

From Federal Reserve Bank of Cleveland, Economic Trends, "Household Financial Position" by O. Emre Ergungor and Patricia Waiwood:
In the years preceding the stock market and housing bubbles, household wealth grew faster tan incomes, leading Americans to believe that they were getting richer. As the bubbles burst, the wealth-to-income ratio took a dive and returned to its long-term trend. The adjustment took place as households constrained their spending and reduced their debt. After peaking in 2008, household consumption expenditures dropped slightly (1.69 percent), hitting a trough in 2009. Yet since then, the wealth ratio has stabilized, and consumption expenditures have resumed growth, already climbing 2.2 percent beyond the pre-recession peak.


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