Paul Krugman points out a finding from the latest Survey of Consumer Finances, showing that, adjusted for inflation, “families are poorer now than they were in 2001.” The gains made in net worth between 2004 and 2007 have all been erased by collapsing stock and housing prices, the study finds. Krugman notes that it is just the latest proof of the disastrous effects of the housing bubble:
It’s worth pointing out that with this release, yet another pillar of the what-me-worry school of economics has fallen. You may remember that a few years ago there was a lot of talk about how only bubbleheads paid attention to our low, low savings rate, because the truth was that Americans were getting steadily wealthier thanks to rising asset values.
Not so much, it turns out.