Feeling pinched these days? Here’s why …

Economists estimate households will have lost more than $5 trillion in net worth since the summer of 2007 because of falling home equity and stock prices.

In recent years, households have used their big multiyear wealth gains as a means to afford more debt and as a surrogate form of savings, instead of socking away more of their pay. But by the end of 2008,  They are now more dependent on income growth to finance their spending and saving and less so on credit and wealth.

Source: Business Week

* * * * *

Ken’s Take: On average, that works out to be about $40,000 per household — or about 80% of median annual household income — i.e. the rough equivalent of an average person being laid of for about a year.  Ouch.

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