American economists are still trying to assess and understand what we now call the Great Recession. N.C. State University economist Mike Walden discusses an astonishing number related to that recession.
“There’s been a lot of comparisons between the recession we’ve been through and previous recessions. You’ve heard a lot of discussion about this recession’s has been the worst since the 1930s. I saw a new piece of research that looks specifically at household wealth, and here’s a number that astonished me: The authors of the research calculated that between 2007 and 2010, the median net worth of households dropped by 47 percent – almost by one half.
“That was absolutely unprecedented in the World War II period, and you do have to go back certainly to 1930 to find a comparable number. The reason for the big drop, I think, is obvious. We had the double whammy of, … certainly, a declining stock market – for example, the Dow Jones going from 14,000 to under 7,000. And we had declining home values – the average home losing about a third of its value over the last five years.
“I think this is a big reason why economists have called this recent recession the Great Recession.
“Good news: We’re seeing those numbers begin to come back. Stocks are almost totally back, and the housing market is beginning to show some revival. These are absolutely necessary changes for us to get out of the Great Recession.”