As of January of this year, we had recovered just over one-third of the payroll jobs we lost, and the unemployment rate was still elevated at 8.3 percent. As you might expect, the slow recovery in the labor market has been mirrored in only a modest recovery in households’ wage and salary income.
Moreover, the gradual recovery in business activity has depressed households’ returns on their financial assets, and the value of many homes is still depressed. This unusual weakness in household income and wealth, coupled with impaired access to credit, has attenuated the normal recovery in consumer demand that typically occurs during an economic upturn.