Posted by AzBlueMeanie:
I posted about this last week, the Washington Post reported that Americans saw wealth plummet 40% from 2007 to 2010, Federal Reserve says.
Paul Krugman has finally weighed in on this report. Wealth Destruction:
I haven’t weighed in on the Survey of Consumer Finances, which shows a sharp decline in net worth and real income between 2007 and 2010. I guess the basic response should be “Well, duh” — that’s what happens when you have a massive housing bust and a severe economic slump.
But I gather that some of the usual suspects are trying to claim that this is all President Obama’s fault. I’d say I was surprised, except that the total unscrupulousness of this crew is by now something to take for granted.
Anyway, to make a not terribly original point, the SCF is useful because it gives us information on the distribution of net worth, not just its level. When it comes to level, we have another and more timely source, the Fed’s flow of funds data. And here’s what real net worth of households per capita looks like:
To say the obvious, the plunge in net worth took place under the previous administration; it bottomed out just two months after Obama took office, which makes it hard to claim that it was his fault.
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Finally, wealth growth during the Clinton years looks as if it was mainly real, with only a moderate bubble component; wealth growth in the Bush years was all bubble.