The Great Recession of 2007 hit all American households hard, but a March report from the Center on Wealth and Philanthropy at Boston College shows that the economic downturn was relatively less hard in Boston.
The report was written for The Boston Foundation in order to assess the future of charitable giving, but its most interesting results describe the overall state of wealth in the region.
By now it’s well understood that the recession was gentler on wealthier Americans, and that begins to explain why the Boston area—which is richer, on average, than the nation as a whole—bounced back so quickly. The Boston College report cites three specific reasons why the Boston metropolitan area (defined as Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester counties) fared so well: The resilience of the real estate market in the northeast; high rates of investment in the stock market, which has recovered faster than other parts of the economy; and the relatively low debt levels of Boston households.
Boston as a whole weathered the recession well, but the region’s wealthiest residents came out of it the best. According to the report, the 14 percent of Boston area households with a net worth north of $1 million lost 15.9 percent of their wealth. At the same time, the 41 percent of households with a net worth of less than $100,000 lost 77 percent of their wealth. It’s such a staggering difference that the authors of the report decided to state it twice, writing, “It’s worth repeating this important finding: 41 percent of Boston area households lost more than three-quarters of their wealth during the recession.”
The recessionary shocks took a toll on charitable giving, knocking it down 23 percent, from $2,420 per household in 2007 to $1,861 per household in 2009. But even with this dip, the overall outlook of the report is quite sunny for Boston where, from 1997-2011, the economy grew faster and the unemployment rate remained lower than national rates, and, today, the broad top-tier of society is awash in money.
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