The Asset Price Meltdown and the Wealth of the Middle Class

Edward N. Wolff (NYU)

Spanning the years 1962 to 2010, Wolff’s project will focus mainly on how the middle class fared in terms of wealth over the years 2007 to 2010 during one of the sharpest declines in stock and real estate prices. The debt of the middle class exploded from 1983 to 2007, already creating a very fragile middle class in the United States.

Wolff’s main focus is whether their position deteriorated even more over the current recession, which he suspects is the case. “Wealth differences have become exacerbated,” he said. “The rising polarization is rather troubling.”

The project will also investigate trends in wealth inequality from 2007 to 2010, changes in the racial wealth gap and wealth differences by age and marital status, and trends in homeownership rates, stock ownership, retirement accounts, and mortgage debt.

Wollf’s primary data source study is the Survey of Consumer Finances (SCF), conducted by the Federal Reserve Board, as the U.S. Census does not collect information on topics such as household assets and debt.

He also will draw on the 1962 Survey of Financial Characteristics of Consumers (SFCC), the Federal Reserve Board’s a precursor to the SCF; the so-called 1969 MESP database, a synthetic dataset constructed from income tax returns and information provided in the 1970 Census of Population; the Panel Study of Income Dynamics (PSID), which spans the years from 1984 to 2007, and the 2009 PSID’s special supplement on house foreclosures and “distressed” mortgages.