American households lost $5.1 trillion, or 9 percent of their net wealth, in the final three months of last year — shrinking by more than at any time in 50 years, the Federal Reserve said Thursday.
For all of 2008, family worth fell by $11.2 trillion as home values and stock portfolios tanked.
The Fed also reported that household borrowing contracted at a 2 percent annual rate in the fourth quarter, after increasing at a 0.2 percent pace in the previous period. Home mortgage debt fell at a 1.6 percent pace — the third consecutive quarter of declines — and consumer credit dropped at a 3.2 percent rate.
The central bank's "Flow of Funds" report came on the same day the government said initial claims for state jobless benefits last week continued their steady rise last week and retail sales in February resumed their downward trend after a brief uptick the month before.
The ever-deepening recession caused 654,000 more out-of-work Americans to file new claims last week, bringing the total number taking assistance to 5.3 million, according to a Labor Department report. A year ago, the total was 2.8 million.
An additional 1.4 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year. That tally was as of Feb. 21, the most recent available.
The latest numbers reflect the most people on the jobless rolls since 1967 and the highest percentage of the U.S. workforce since the last major recession, in June 1983.
Underscoring the data were more job cuts announced this week by computer maker Dell Inc., AMR Corp.'s American Airlines, National Semiconductor Corp. and United Technologies Corp.
Meanwhile, retail sales fell in February for the seventh time in the past eight months, according to the Commerce Department report.
Retail sales edged down 0.1 percent last month — a less severe drop than the 0.5 percent that economists had expected. But economists were looking for continued weakness as consumers pared spending at a rate unseen in 28 years amid the rising joblessness, tighter credit and falling home equities.
The number of households that received at least one foreclosure-related notice in February rose 30 percent from last year's levels, to nearly 291,000, RealtyTrac reported Thursday.
The government also revised January's retail performance to show a 1.8 percent rise — the biggest increase in three years and stronger than the 1 percent gain that was originally reported.
Excluding motor vehicles and parts, sales increased 0.7 percent in February, compared with a 1.6 percent advance in January. Vehicle sales plunged 4.3 percent, after a surprise 3.1 percent rise the previous month.
At a hearing of the Senate Budget Committee on Thursday, Treasury Secretary Timothy Geithner reiterated the administration's priorities for righting the economy.
"The obligation we share is to make sure that our government does as much as we can to get Americans back to work, to help stimulate private investment and help get credit flowing again," Geithner said. "We have to move together to try to do this as rapidly and effectively as possible."
Reporting from NPR wire services
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