In a speech March 10 to the Japan Society in New York, Blackstone Group CEO Stephen Schwarzman lamented that “40% to 45% of the world’s wealth has been destroyed in little less than a year and a half,” Reuters reported. While that may sound hyperbolic to some ears, it turns out that, in fact, much wealth has been lost, especially in the United States, over the past year.
On March 12, the Federal Reserve reported that U.S. households lost $5.1 trillion of their wealth in 2008′s final quarter, or 9%. That is the is the biggest single loss the Fed has recorded in the 57 years it’s been keeping those records. In the fourth quarter, the S&P 500 fell 23%, while the value of residential real estate fell 4%.
For all of 2008, the Fed recorded an 18% drop in household wealth, or $11.1 trillion. That’s the biggest drop in wealth since 2002, when household net worth fell 3% following the puncturing of the tech bubble.