The asset price meltdown, rising leverage, and the wealth of the middle class

Edward Wolff

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This article investigates wealth trends from 1983 to 2010. The most telling finding is that median wealth plummeted by 47 percent over the years from 2007 to 2010. The inequality of net worth, following two decades of little movement, was up sharply between 2007 and 2010. Relative indebtedness continued to expand during the late 2000s for the middle class, although the proximate causes were declining net worth and income, rather than an increase in absolute indebtedness. In fact, the average debt of the middle class in real terms was down by 25 percent. The sharp fall in median net worth and the rise in its inequality from 2007 to 2010 are traceable to the high leverage of middle class families and the high relative importance of homes in their portfolio.

    Original languageEnglish (US)
    Pages (from-to)333-342
    Number of pages10
    JournalJournal of Economic Issues
    Volume47
    Issue number2
    DOIs
    StatePublished - Jun 1 2013

    Keywords

    • household wealth
    • inequality
    • portfolio composition
    • racial inequality

    ASJC Scopus subject areas

    • Business, Management and Accounting(all)
    • Economics and Econometrics

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