Many Still Struggling to Recover Lost Wealth

A Federal Reserve study shows that many have yet to recover from the recent recession.

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Reports about positive developments in some sectors of the economy have gotten lots of media attention, but there are still troubling signs that the country has a long way to go to achieve prosperity.

Households have recovered only 45 percent of the $16 trillion in wealth lost during the recent recession, according to the latest analysis from the Federal Reserve Bank of St. Louis. "A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified," the Fed said.

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The households having the worst problems recovering lost wealth tend to be young, African-American, Hispanic, or lacking in formal education. Such families tended to have minimal savings and high debt, the Fed study said, and many have experienced no recovery at all.

Political scientist Bill Galston, of the Brookings Institution and a former adviser to President Bill Clinton, says, "The reality of the economy is probably that people who don't have work are a little more optimistic about finding it, but people who do have work are not as optimistic about moving forward."

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They have strong doubts that their pay will increase, that they will get better benefits and improved working conditions, and that their children will do better than they are doing, Galston says.

On the positive side, the stock market has been soaring and consumer confidence has improved. However, unemployment and under-employment remain serious problems.

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  • Ken Walsh covers the White House and politics for U.S. News. He writes the daily blog "Ken Walsh's Washington" for usnews.com, and "The Presidency" column for the U.S. News Weekly. He is the author of the new book "Prisoners of the White House: The Isolation of America's Presidents and the Crisis of Leadership." Ken Walsh can be reached at kwalsh@usnews.com and followed on Facebook and Twitter.