Millennials Still Feel the Recession's Bite

The damage from the collapse of the U.S. housing market wasn’t evenly distributed. Just ask Jason and Jessica Alinen. The couple, who live near Seattle, declared bankruptcy in 2011 when the value of their house dropped to less than $200,000 from the $349,000 they paid right before the slump. “We thought we’d have a white-picket fence, two kids, two dogs, and $100,000 in equity,” says Jason, 33.

For households headed by someone 40 years old or younger, wealth adjusted for inflation remains on average 30 percent below 2007 levels, according to research published in February by the Federal Reserve Bank of St. Louis. In normal times younger households spend a greater share of their income on furnishings and cars than their older counterparts. Today the young are spending more cautiously. “These changes going on with individual balance sheets could have impacts on the whole economy,” says William Emmons, who wrote the St. Louis Fed study with Bryan Noeth. “Maybe this is one of the reasons that it’s been so hard to understand this weak recovery.”