Recent Trends in Household Wealth, 1983-2009: The Irresistible Rise of Household Debt

Edward Nathan Wolff

Abstract


I find here that the early and mid 2000s (2001 to 2007) witnessed both exploding debt and a consequent “middle class squeeze.” Median wealth grew briskly in the late 1990s and even faster in the 2000s. The inequality of net worth was up slightly during the 2000s. Indebtedness, which fell substantially during the late 1990s, skyrocketed in the early and mid 2000s. Among the middle class, the debt-income ratio reached its highest level in 24 years. The disparity in wealth holdings between African-American and white households was about the same in 2007 as in 1983, though Hispanics did show some relative gains on non-Hispainc whites over the years 2001 to 2007. Young households (under the age of 45) after some relative gains from 1983 to 1989, saw their relative wealth position deteriorate over the years 1989 to 2007. Projections to July 2009 on the basis of changes in stock and housing prices suggest that median wealth plunged by 36 percent and there was a fairly steep rise in wealth inequality, with the Gini coefficient advancing from 0.834 to 0.865.  


Keywords


household wealth, inequality, racial inequality, portfolio composition

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DOI: http://dx.doi.org/10.5202/rei.v2i1.26

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