Household Wealth Destruction

Here is a chart I pulled together of household & non-profit wealth tracked by the Federal Reserve (latest data available through Q3 2008). Since hitting a peak in Q3 2007, household net worth has declined by $7.1 trillion over the last year. Most of the declines can be attributed to housing ($1.1 trillion), equities & mutual fund investments ($3.6 trillion), and pension fund reserves ($1.6 trillion). Despite this steep drop from the peak, I was surprised to see that household net worth still remains 21% above 2003 levels. However, with home prices down another 10% and equities down over 20%, we could see another $5-$6 trillion of wealth destruction in Q4 alone. The midpoint of this estimate would leave household wealth 20% below its peak of $63.6 trillion.