In a speech March 10 to the Japan Society in New York, the chairman and CEO of the private equity firm Blackstone Group, 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 18 months.
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 biggest single loss in the 57 years the Fed’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.