What Assets Do People Buy During Economic Hardship? The economy and the housing market are closely linked, but depending on what area a household lives in, the housing market might have a larger direct effect on a household's wealth. Similar to the wealth effect, when the value of an area's housing stops rising, the wealth of households remains still or declines. Does a Decline in the Housing Market Cause a Rise in Consumer Spending? Areas with a higher cost of living might prevent a family from owning assets as quickly as households living in a lower cost of living areas. Household wealth factors include income and assets owned by the household, but also the cost of living in a certain area can have an effect on net worth over time. The overall average household net worth is about $121,000. Households with elderly members have a higher average net worth compared to other age groups. When asking about the wealth of households, the measurement used is the net worth of homes subdivided into certain age groups. Due to the economy as a whole being in a recession, people will choose not to wait for an asset to appreciate because there may not be a buyer available to purchase the asset if the entire economy is sliding. The term saving in economics refers to a person choosing to not spend money on an item, or choosing to hold the cash value of an asset rather than the asset itself. Why Do Households Save More During Economic Downturn?

Household definition economics