Younger people were hit harder by the recession than older people. What explains the disparity?
- One of the biggest factors, a new paper suggests, is the larger mortgage debt young households under age 45 had relative to their assets compared to older people in the run-up to the financial crisis — and the fact that much of their wealth came from owning homes.
- Reviewing data from the Federal Reserve, Edward Wolff, an economist at New York University, finds the average wealth of people under age 35 dropped from $95,500 in 2007 to $48,400 in 2010 (in 2010 dollars), while that of people age 35 to 44 shrank from $325,000 to $190,000.
- Older groups, by contrast, suffered much smaller relative declines.