Friday, April 25, 2014

Measuring the Losses of the Great Recession

"As society becomes richer over time, succeeding cohorts acquire more wealth than their predecessors," notes an Urban Institute study. "The cohort born in 1943-51 were wealthier than those born in 1934-42 (at the same age), who were wealthier than those born in 1925-33."

Until 1952, that is. For those born in 1952 and later, wealth began to shrink relative to preceding cohorts at the same age. The Great Recession had something to do with this reversal of fortune, according to the study, which estimates how much richer American households would be today if the Great Recession had never happened. Answer: 28.5 percent richer. For younger adults—Gen Xers in particular—the gap between what is and what could have been is much bigger—47 percent—because many were recent homebuyers and disproportionately affected by the housing market collapse.

Source: Urban Institute, Impact of the Great Recession and Beyond

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