The Crisis and The Asset Driven Household
Assistant Professor Department of Economics California State University, Chico
Please cite the paper as:
Jake Jennings, (2018), The Crisis and The Asset Driven Household, World Economics Association (WEA) Conferences, No. 2 2018, The 2008 Economic Crisis Ten Years On, 15th October to 30th November, 2018
The financialization of the US economy leading up to the 2008 economic crisis altered the structure and behavior of household saving and consumption. Shocks from the crisis to consumer confidence and credit markets rerouted the declining household saving rate and steady upward progression of consumption. Ten years later, with the gradual recovery and slow middle-income growth, US household saving and consumption have re-set upon their initial precipitous path. This paper outlines the theoretic and empirically observed links between wealth driven by asset prices and credit and their direct and indirect impacts upon household behavior. In analyzing the multi-tiered relationships between wealth and credit, we argue that the tenuous and vulnerable links within the asset driven household sector remain unresolved 10 years after the crisis.