September 2008 Crash Cost Each American Household $100K

[paparush]

SUMMARY

U.S. households lost on average nearly $5,800 in income due to reduced economic growth during the acute stage of the financial crisis from September 2008 through the end of 2009.<1> Costs to the federal government due to its interventions to mitigate the financial crisis amounted to $2,050, on average, for each U.S. household. Also, the combined peak loss from declining stock and home values totaled nearly $100,000, on average per U.S. household, during the July 2008 to March 2009 period. This analysis highlights the importance of reducing the onset and severity of future financial crises, and the value of market reforms to achieve this goal.

KEY FINDINGS

Income – The financial crisis cost the U.S. an estimated $648 billion due to slower economic growth, as measured by the difference between the Congressional Budget Office (CBO) economic forecast made in September 2008 and the actual performance of the economy from September 2008 through the end of 2009. That equates to an average of approximately $5,800 in lost income for each U.S. household.
Government Response – Federal government spending to mitigate the financial crisis through the Troubled Asset Relief Program (TARP) will result in a net cost to taxpayers of $73 billion according to the CBO. This is approximately $2,050 per U.S. household on average.

Home Values – The U.S. lost $3.4 trillion in real estate wealth from July 2008 to March 2009 according to the Federal Reserve. This is roughly $30,300 per U.S. household. Further, 500,000 additional foreclosures began during the acute phase of the financial crisis than were expected, based on the September 2008 CBO forecast.

Stock Values – The U.S. lost $7.4 trillion in stock wealth from July 2008 to March 2009, according to the Federal Reserve. This is roughly $66,200 on average per U.S. household.

Jobs – 5.5 million more American jobs were lost due to slower economic growth during the financial crisis than what was predicted by the September 2008 CBO forecast.

http://www.pewtrusts.org/our_work_report_detail.aspx?id=58695&category=618

[ShortnFiery]

1. Why US, the average American Household? WE didn't squander away this money!

Take it BACK from the multi-national banksters. :thumbsup:

[izquierdista]

3. Calculating that "average"

That would be multiple billions from a few (formerly) rich people, averaged with lots of people in the ghetto who had no portfolio losses -- because they have no portfolio.

[ShortnFiery]

4. That's understood. However, the average American did NOT take these horrid risks.

It's so wrong that we bailed out the banksters and left the average wage earning American in the lurch. It's just WRONG. Injustice?

I don't know how to make things right other than build our manufacturing base again. The only hope for that would be through the MASSIVE development/investment in GREEN ENERGY.

Sadly, the super-rich controls the purse strings of this country. However, if they could see long term, INVESTMENT in WORKERS within America is the only way to revitalize our beloved country.

[izquierdista]

7. Sadly they won't

Unless the gated communities get stormed and pillaged regularly until the super-rich realize that they can't set themselves apart from the average worker.

[cbdo2007]

2. How much of this has been gained back?

It isn't really fair to count loss of stock values unless you're also going to figure in how much they've come back since then. Also, this gave many smart investors the opportunity to average down, greatly increasing their "stock wealth".

[paparush]

5. I guess that will be the focus of the next Pew study.

[Yupster]

8. It's a lot harder going up than down

It's just the arithmetic of it.

If you have 100 chickens and you lose 50 % of them, then you have 50 chickens.

Next year you make 50 % chickens. You'd think you'd be back at 100 chickens, but you'd only have 75.

_____________________________________________________________________________________________________

So reverse it.

What if you make 50 % on your chickens the first year. Now you have 150 chickens.

Next year you lose 50 %.

Back to 75 again.

Weird.

So in answer to the question, people haven't made back much on average -- probably not near half what they lost.

Plus, even worsier, they lost the opportunity cost too.

Pension funds etc assume an annual growth rate, say 8 % a year. Two years (or in fact 10 years) of no growth or even losses has destroyed all the assumptions those plans are made on.

[HughMoran]

6. Uggh, and at the rate things are falling now - Dow -400, we'll be back there soon

:cry:

[Octafish]

9. And when somebody loses money...

...somebody else finds money.