WASHINGTON — The brute force of the recession earlier this year turned back the clock on Americans’ personal wealth to 2004 and wiped out $1.3 trillion as home values shrank and investments withered.
Net worth, or the value of assets such as homes, checking accounts and investments minus debts like mortgages and credit cards, declined 2.6 percent in the first three months of the year, the Federal Reserve said Thursday.
Those months were some of the worst of the recession so far for job losses, and the stock market sank to its lowest point of the year in March. Since then, some signs suggest the economy is stabilizing.
Still, partly because of the carnage earlier in the recession, Americans are putting plans on hold until the economy improves.
B. Smith, a conductor for a Chicago commuter rail line, is waiting to buy cars for two of his children. He spent $260,000 to build his suburban Chicago home about 10 years ago and watched its value spike to $380,000 in January 2008. Today, it stands at about $310,000.
“I’m still ahead, but I’m not as ahead as I was before,” he said.
Even if things improve, such a drastic evaporation of wealth will probably make Americans more thrifty down the road, said Scott Hoyt, senior director of consumer economics at Moody’s Economy .
“The bulk of consumers alive today have not experienced declines in wealth like this,” Hoyt said. “They are already turning thrifty, and it will stay that way beyond the short term. This has been a significant learning experience.”
Americans’ personal savings rate zoomed to 5.7 percent in April, the highest since 1995.
And the amount in savings — $620.2 billion — was the most on record dating to January 1959.
