These developments were exacerbated by a rapid rise in the unemployment rate from 5 percent in December 2007 to 10 percent in October 2009 and a large reduction in labor market earnings due to increased unemployment, wage cuts, and furloughs. Stock prices also collapsed, with the Dow Jones Index losing nearly half of its value between mid-2007 and early 2009 (see Figure A. Between 20, average housing prices in the largest metropolitan areas fell by nearly a third as measured by the Case-Shiller Index. The Great Recession caused an unprecedented decline in wealth holdings among American households. Multivariate longitudinal analyses document that these large relative losses were disproportionally concentrated among lower income, less educated, and minority households. Between 20, one fourth of American families lost at least 75 percent of their wealth, and more than half of all families lost at least 25 percent of their wealth. Despite large changes in wealth, longitudinal analyses demonstrate little change in mobility in the ranking of particular families in the wealth distribution. In percentage terms, however, the declines were greater for less-advantaged groups as measured by minority status, education, and pre-recession income and wealth, leading to a substantial rise in wealth inequality in just a few years. All socioeconomic groups experienced declines in wealth following the recession, with higher wealth families experiencing larger absolute declines. This study examines disparities in wealth holdings leading up to the Great Recession and during the first years of the recovery. The collapse of the labor, housing, and stock markets beginning in 2007 created unprecedented challenges for American families.
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