The financial crisis of 2007 to 2009 took a tremendous toll on household wealth and shattered the sense of financial security for millions of American families. American households lost more than $20 trillion in wealth (in 2012 dollars) in the Great Recession, and households still had $10 trillion less in wealth at the end of 2012 than they had before the crisis. This massive wealth decline contributed to a widespread loss of economic security, particularly among lower-income and moderate-income families, single women, and communities of color.
This economic insecurity can have long-ranging adverse effects on U.S. economic growth as American families:
- Invest less in new businesses, which slows productivity growth and innovation
- Save less for large long-term expenses such as retirement and their children’s college tuitions, which leads to less-stable financing for capital investments
- Become less likely than they would with more wealth to switch jobs and careers when better opportunities arise, which slows employees’ productivity
For more on this topic, please see:
- The Universal Savings Credit by Christian E. Weller and Sam Ungar