No abstract

The effects of the recent financial crisis and consequent recession on the household sector as a whole were often starkly apparent and readily measured. Although a great deal was known about some economic outcomes for certain subsets of households, a more complete picture for the full range of households was not available. To fill this gap, in 2009, the Federal Reserve Board (FRB) designed and implemented a follow-up survey of families that had participated in the then most recent wave of the Survey of Consumer Finances (SCF) in 2007, just as the economy started to turn down. Taken together, the information from the pairs of interviews from the two years provides a unique basis for measuring how families were affected. This paper provides the first look at the changes in families' finances captured in the 2007-2009 SCF panel. The panel data allow us to examine how the effects of changes in the value of specific types of assets and debts and other economic disturbances played out at the household level. The data also allow us to consider the potential longer-term consequences of the financial crisis on families' decisions and expectations. The broad contours of changes in households' assets, debts, and wealth align with changes in the corresponding aggregate measures, but the microdata from the panel highlight the substantial variation in families' experiences between 2007 and 2009. Although over 60 percent of families saw their wealth decline over the two-year period, a sizable fraction of households experienced gains in wealth, while some families' financial situation changed little, at least on net. The shifts in wealth do not appear to be correlated in a simple way with families' characteristics: instead, the pattern of mixed losses, gains, and modest shifts in wealth across families generally holds within groups defined by demographic characteristics or by 2007 wealth or income.On the whole, changes in wealth appear to stem from changes in asset values more so than changes in the composition of families' portfolios or their outstanding debt, though, again, the results vary across households. As might be expected, changes in the values of homes, stock, and business equity appear to have been particularly important determinants of changes in many families' wealth. The economic experiences of families that might have been seen as financially vulnerable in 2007, by and large, did not differ dramatically from those of other families, except for families with high debt payments relative to income, who were more likely to have had comparatively large declines in wealth. Finally, at least overall, families appear more cautious in

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.

The Federal Reserve Board's Survey of Consumer Finances for 2004 provides insights into changes in family income and net worth since the 2001 survey. The survey shows that, over the 2001-04 period, the median value of real (inflation-adjusted) family income before taxes continued to trend up, rising 1.6 percent, whereas the mean value fell 2.3 percent. Patterns of change were mixed across demographic groups. These results stand in contrast to the strong and broad gains seen for the period between the 1998 and 2001 surveys and to the smaller but similarly broad gains between the 1995 and 1998 surveys (figure 1). Much like median income, median real family net worth in the 2001-04 period increased 1.5 percent, but mean net worth rose 6.3 percent. The increase in wealth appears to have been clearest in the middle income group. Over many other demographic groups, the data show a complex pattern of mixed increases