The Wealth Bulletinreports that a new study from UBS says a staggering $40 trillion has disappeared from global household wealth since the peak of the property and equity bubble.
The report, authored by Andreas Höfert, global head wealth management research, Walter Edelmann, head global investment strategy, and Kurt Reiman, head of thematic research, was particularly bearish on the global economy and predicts further falls in global wealth.
It said there has been a decline in the monetary value of global wealth of 30% so far, and expects falls to go further during the next two and a half years.
Commercial-listed real estate suffered the worst falls. The two years between February 2007 and February 2009 saw the Global Property Research 250 Global Index plummet by a massive 63.4%, wiping out $774bn.
Equity market falls made up the bulk of the $40 trillion loss. Over the course of the crisis, the capitalisation of the US market slid from $19.1 trillion at its October 2007 peak to $9.2 trillion in late February 2009; a nearly $10 trillion destruction.
The huge loss in wealth in the property and equity market explains why consumers are reducing spending. Bloombergreports on a new survey conducted by AlixPartners LLP that finds consumers may reduce annual spending by more than $1 trillion after the recession ends. The loss of wealth has consumers wanting to save more than they have in decades.
