Fortune columnist Stephen Gandel looks at how stock market losses in the third quarter eroded more household wealth than at anytime in the past four years.
Stock market declines were the primary culprit, as financial and pension assets dropped $1.7 trillion in the quarter. Meanwhile, the value of Americans’ homes rose $443 billion. Gandel writes about the implications:
Drops in net worth can cause consumers to spend less, which can slow the economy. But the third quarter wealth decline is unlikely to give the Fed much pause in raising interest rates, which it is expected to do at a meeting later this month. That’s because the stock market has recovered most of the losses it previously incurred since the end of the third quarter.