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Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009

Author

Listed:
  • Jesse Bricker
  • Brian K. Bucks
  • Arthur Kennickell
  • Traci L. Mach
  • Kevin Moore

Abstract

In 2009, the Federal Reserve Board implemented a survey of families that participated in the 2007 Survey of Consumer Finances (SCF) to gain detailed information on the effects of the recent recession on all types of households. Using data from the 2007-09 SCF panel, we highlight the variation in households' financial experiences by examining the distribution of changes in families' balance sheets. Further, we use information on changes in families' saving, investing, and spending behavior to consider the potential longer-term consequences of the current recession on households' finances and decisions. Most families experienced a decline in wealth between 2007 and 2009, but many families saw only small changes on net, and others saw substantial increases in their wealth. This pattern of gains and losses typically holds within demographic groups. Changes in families' wealth over the period appear to reflect changes in asset values (particularly the value of homes, stocks, and businesses) rather than changes in the level of ownership of assets and debts or in the amount of debt held. On the whole, families appear more cautious in 2009 than in 2007, as most families reported greater desired buffer savings, and many expressed concern over future income and employment.

Suggested Citation

  • Jesse Bricker & Brian K. Bucks & Arthur Kennickell & Traci L. Mach & Kevin Moore, 2011. "Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009," NBER Working Papers 16985, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16985
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    1. Arthur Kennickell & Annamaria Lusardi, 2004. "Disentangling the Importance of the Precautionary Saving Mode," NBER Working Papers 10888, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Angus Deaton, 2012. "The financial crisis and the well-being of Americans," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 1-26, January.
    2. Alberto Montagnoli & Mirko Moro, 2018. "The Cost of Banking Crises: New Evidence from Life Satisfaction Data," Kyklos, Wiley Blackwell, vol. 71(2), pages 279-309, May.
    3. Hsiao, Yu-Jen & Tsai, Wei-Che, 2018. "Financial literacy and participation in the derivatives markets," Journal of Banking & Finance, Elsevier, vol. 88(C), pages 15-29.
    4. Jeffrey Hoopes & Patrick Langetieg & Stefan Nagel & Daniel Reck & Joel Slemrod & Bryan Stuart, 2016. "Who Sold During the Crash of 2008-9? Evidence from Tax-Return Data on Daily Sales of Stock," NBER Working Papers 22209, National Bureau of Economic Research, Inc.
    5. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2015. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 21-41.
    6. Catalina Amuedo-Dorantes & Susan Pozo, 2015. "The impact of the recession on the wealth of older immigrant and native households in the United States," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-27, December.
    7. Catalina Amuedo-Dorantes & Cristina Borra, 2018. "Emerging wealth disparities after the storm: Evidence from Spain," Review of Economics of the Household, Springer, vol. 16(4), pages 1119-1149, December.
    8. Yvonne McCarthy & Kieran McQuinn, 2017. "Price Expectations, Distressed Mortgage Markets and the Housing Wealth Effect," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 478-513, April.
    9. Jesse Bricker & Jeffrey P. Thompson, 2014. "Does education loan debt influence household financial distress? An assessment using the 2007-09 SCF Panel," Finance and Economics Discussion Series 2014-90, Board of Governors of the Federal Reserve System (U.S.).
    10. Fang, Ming & Li, Haiyang & Wang, Qin, 2021. "Risk tolerance and household wealth--Evidence from Chinese households," Economic Modelling, Elsevier, vol. 94(C), pages 885-895.
    11. Valentina Duque & Natasha V Pilkauskas & Irwin Garfinkel, 2018. "Assets among low-income families in the Great Recession," PLOS ONE, Public Library of Science, vol. 13(2), pages 1-21, February.
    12. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2011. "How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?," NBER Working Papers 17547, National Bureau of Economic Research, Inc.
    13. Dana A Glei & Noreen Goldman & Maxine Weinstein, 2019. "A growing socioeconomic divide: Effects of the Great Recession on perceived economic distress in the United States," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-24, April.
    14. William B. Peterman & Kamila Sommer, 2014. "How Well Did Social Security Mitigate the Effects of the Great Recession?," Finance and Economics Discussion Series 2014-13, Board of Governors of the Federal Reserve System (U.S.).
    15. Richard C. Sutch, 2016. "The One-Percent across Two Centuries: A Replication of Thomas Piketty’s Data on the Distribution of Wealth for the United States," Working Papers 201602, University of California at Riverside, Department of Economics.
    16. Ryan Compton & Daniel Giedeman & Leslie Muller, 2018. "Racial Differentials in the Wealth Effects of the Financial Crisis and Great Recession," Journal of Economics, Race, and Policy, Springer, vol. 1(2), pages 126-141, September.
    17. Arthur B. Kennickell, 2011. "Tossed and turned: wealth dynamics of U.S. households 2007-2009," Finance and Economics Discussion Series 2011-51, Board of Governors of the Federal Reserve System (U.S.).
    18. Jeffrey L Hoopes & Patrick Langetieg & Stefan Nagel & Daniel Reck & Joel Slemrod & Bryan A Stuart, 2022. "Who Sells During a Crash? Evidence from Tax Return Data on Daily Sales of Stock," The Economic Journal, Royal Economic Society, vol. 132(641), pages 299-325.

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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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