Even With Less, Consumers May Spend MoreKathleen Madigan
The drop in the stock market and the collapse in home prices put a crimp in personal wealth last year. In fact, real household net worth--assets minus liabilities--dropped by 5.8% in 1990, the biggest decline since the Federal Reserve started keeping records in the early 1950s (chart). The wealth slump has raised worries that ailing consumer spending will decline further as households divert income away from shopping malls and shift it toward savings accounts in an attempt to rebuild their depleted assets.
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