Yesterday the Fed came out with its quarterly report on household wealth, showing that we were $11 trillion less rich at the end of 2008 than we were at the end of 2007. Our collective wealth has now dropped six quarters in a row—largely due to declines in stock prices and home values. (I should point out that technically this data is for individuals and non-profits, but non-profits only make up 8% of respondents, so everyone pretends this is simply a measure of household wealth.) In 12 months we lost the equivalent of the combined GDP of Germany, Japan and the U.K. We’re now only slightly wealthier than we were at the end of 2003.
Where do we go from here? Well, I’m glad you asked, because I happen to have a story in this week’s magazine about that. In a nutshell: back to prioritizing our jobs. The piece begins:
Remember when jobs weren’t worth your small talk? Think back a year or two. Picture yourself at a cocktail party or maybe picking up the kids from soccer. How did the conversation go? You talked about your house. A new deck! You talked about your portfolio. Gotta go small cap. Did you mention how much pleasure you derived from bringing home a steady paycheck? Probably not. “Land was valuable, and capital was valuable, and labor — who cared?” says David Ellison, a Boston-based money manager. “The attitude was, As long as I buy a few homes and invest in a hedge fund, I’m done. I can sit in my chair and watch football games.”
We now know how that ended up. Your portfolio is down 50%, your mortgage is worth more than your house, and your savings account is barely visible. The job, meanwhile, is making a roaring comeback. Not in a statistical sense, of course. We are in a recession, after all: at 8.1%, unemployment hasn’t been this high since 1983. But in terms of the American psyche — and a household’s balance sheet — we’re rediscovering the job as the most valuable asset a person can have.
You can read the entire story here.
Unfortunately, the beautiful infographic that runs with the article in the magazine isn’t on regular Time.com. But for you, readers of the Curious Capitalist, anything! Art director Cindy Hoffman commissioned the piece from illustrator Julie Teninbaum. Photo editor Mark Rykoff and Web wizard Shefik Macauley helped me with the technical aspects of getting it online. Click on it to make it larger:
Barbara!