Bouncing Back from the Great Recession
After a long, hard slog, the U.S. economy is beginning to finally emerge from its economic slumber, and that’s good news for banks looking to sustain current clients and add new ones to the mix as the nationwide financial landscape brightens.
“The Great Recession, which started in December 2007 and officially ended in June 2009, caused significant economic harm to households in the U.S. A net 3.8 million adults lost their jobs, countless businesses, large and small, failed and homeowners lost over $7 trillion in equity in their homes. The financial crisis that predicated the Great Recession still is being felt around the globe a full six years later. Importantly though, U.S. households have made great strides in regaining their financial health,” said Amy Crews Cutts, Equifax’s Chief Economist.
A look back, and a glimpse forward, reveals how far the consumer has travelled since being laid low by the economic collapse of 2007-2008, and the economy’s slow or no growth short-term aftermath.
Four key stages highlighted by the recently released Equifax Observations and Impacts of U.S. Consumer Wealth Trends report published in October 2015 tell the story:
First, big losses – The Great Recession hit many families hard, the Wealth Trends report states. “From December 2007 to December 2008, consumer assets dropped 20%, from $24.1 trillion to $19.2 trillion. Stock prices fell drastically and consumers shifted much of their investments to deposits and other conservative savings accounts.”
A market comeback – The Wealth Trends report says the financial markets weren’t down for long. “Just three years later, consumers had regained confidence and personal assets had returned to pre-recession levels, at $24.5 trillion by June 2011,” the report states.
Then, a “blip” – “The debt ceiling crisis of 2011 caused a minor blip as consumer confidence fell while the U.S. government negotiated until the last minute over a deficit reduction and raising the debt ceiling. Major stock markets lost up to 4% in value and personal assets fell 2% between June 2011 and December 2011,” the report notes.
After that, a steady climb – The report points to a gradual increase for U.S. consumers, “Personal assets have continued to increase steadily since the depths of the Great Recession, rising 32.6% from a pre-recession high of $24.1 trillion in December 2007 to almost $32 trillion in December 2014.”
Clearly, U.S. households were hit, and hit hard, by the Great Recession. But showing considerable resiliency, the consumer has fought back, as the Equifax Wealth Trends report shows, and is in a much better position to increase household economic activity heading into 2016.
For a closer look at U.S. consumer investable assets, check out the chart below, which shows a 34% hike in assets from June 2007 to December 2014:
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