Family net worth falls by 40%

In just 3 years, median household wealth took a deep dive -- from $126,400 to $77,300, mostly because of the housing crash.

By Karen Datko Jun 12, 2012 6:04PM

The Federal Reserve's new Survey of Consumer Finances -- an important and extremely detailed report issued every three years -- confirms what many American families already know: The Great Recession walloped the middle class.


This description of the report in The Washington Post is chilling:

Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Homeownership, once heralded as a pathway to wealth, became an albatross.

Post continues below.

Consider:
  • Median net worth dropped from $126,400 in 2007 to $77,300 in 2010 (adjusted for inflation). "That puts Americans roughly on par with where they were in 1992," says the Post. 
  • In that same time, median household income fell from $49,600 to $45,800.
  • The damage to the middle class was worse than to people on either end of the income scale. The New York Times explains:
One basic reason for this disproportion is that the wealth of the middle class is mostly in housing, and the median amount of home equity dropped to $75,000 in 2010 from $110,000 in 2007. And while other forms of wealth have recovered much of the value lost in the crisis, housing prices have hardly budged.

Among the report's other depressing stats:

  • From Bloomberg: "The proportion of families with retirement accounts decreased 2.6 points to 50.4% during the period, wiping out much of the 3.1 percentage-point increase over the prior three years, the report said."
  • The percentage of families adding to savings fell from 56.4% in 2007 to 52% three years later.
  • In 2010, 19.2% of families had education debt, up from 15.2%. "Among families with education debt, the mean increased 14.0% (from $22,500 in 2007 to $25,600 in 2010), while the median rose 3.4% (from $12,600 in 2007 to $13,000 in 2010)," the report said.

Image: Arrow Down Red (© Kyu Oh/Photodisc/Getty)"The Fed noted that education loans made up a larger share of the average family's obligations than loans to buy automobiles for the first time in the history of the survey," The New York Times said.

Here's one positive: By 2010, only 39.4% of U.S. families carried credit card debt from month to month, a drop of 6.7 percentage points, and the median owed by those who carry a balance was $2,600, a 16.1% drop. The average or mean owed was $7,100. Also, 32% of families didn't even have a card.
The study provided more detail:
Many families with credit cards do not carry a balance. Of the 68.0% of families with credit cards in 2010, only 55.1% had a balance at the time of the interview; in 2007, 72.9% had cards, and 61.0% of these families had an outstanding balance on them. The number of credit cards held by families also decreased. In 2007, 35.0% of families held four or more cards, and that level of ownership fell to 32.7% by 2010. Between 2007 and 2010, the fraction of families with three cards fell from 12.1% to 10.6%, the fraction with two cards fell from 12.7% to 12.2%, and the fraction with one card fell from 13.1% to 12.5%.

Does the content of the report match your life experience in those critical years? 


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58Comments
Jun 13, 2012 2:28AM
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Throwing more money at the very wealthy is not going to improve this economy. The backbone of the economy, as shown in this story, has been broken. The wealthy, no matter how many ridiculous remarks try to say otherwise, are not the driving force to keep this economy going. The middle class is the major engine for economic prosperity.

 

If they get away with it, the wealthiest of the nation will continue to destroy the middle class, because they don't care. You want a strong economy? Make the middle class stronger, rather than weaker. Do away with the tax incentives that make it profitable to ship manufacturing overseas, and rebuild the working class. That's your only hope.

 

The stock market? You might as well go roll the dice in Vegas.

Jun 13, 2012 4:23AM
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I lost 2/3 of my retirement and I don't even own a home. I cannot comprehend how websites like this one and, for example, CNBC, can continue in most articles to speak to us the public as though we were all rich and just around the corner lay even greater prosperity. My net worth now is the same as 12 years ago and, thank God, I work outside the US and don't have to retire this year, my 65th. I will work until I drop. I threw in my lot with the financial market, as we were all encouraged to do in retirement planning, and now I'm paying the price. And no one out there has a solution, not just for me, but for all of us.
Jun 13, 2012 8:39AM
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In 3 years median net worth went to $77,300.  Also in 3 years Obama borrowed $60,000 for a family of 4 and he promises to continue borrowing an additional $15,000 per year from that same family.  So by the end of his first 4 years he will have borrowed just under the median net worth of americans.  How the heck are we going to pay that off...

 

Americans have cut back on their own personal debt.  Instead the government borrowed the money for them and spent it.

Jun 13, 2012 7:24AM
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Until the folks in Washington DC figure out they HAVE TO STOP SPENDING our money things will not be improved. We have an incompetent tool for president and the majority of the congress only desire to keep their jobs and retirement nest eggs. Throw the bum, and his high maintenance wife, out of the White House and clean up Congress.

 

You can clean up Congress by cutting pay and benefits. Let these folks worry about how they are going to retire the same way we do. Let Barack actually have to work  real job rather than leech off others.

Jun 13, 2012 9:28AM
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The rich get richer the poor get poorer. Keep printing all of those new dollars and see how much things are going to cost.
Jun 13, 2012 1:57AM
Jun 13, 2012 8:18AM
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It seems when the middle class goes up the poor go up and the rich go up. When the middle goes down the poor go down and some rich go under. Housing values need to be fixed to match tax rates & insurance values. Housing should have been the first priority with stimulus money to keep those who keep this country afloat secure. As long as the middle class is shaky this countries financials will remain shaky. The stock market & precious medals may have been the only games in town the pass few years but that is not a healthy economy. Selling investors down the river has gotten old and the young have seen what it has done to their elders. We need housing values to match worth and job wages to support housing with a vacation that is well deserved for the middle class.
Jun 12, 2012 11:52PM
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Ummm.... If my home value goes down... and so does EVERYBODY elses.... how do I lose value? If I sold my home, I could buy a comparable home at the same price.  However, what REALLY ticks me off... is how the stock market is the highest it's ever been but EVERYONE I know... friends, family... mostly in semi-conservative funds... have been losing money for years! How the heck does that happen... somth'n is G-O-O-F-Y.  The big thing that keeps going up, up UP year after year, even though most things are going down... is Health Care!  Private companies making profit off the sick... now that is sick.
Jun 13, 2012 1:34AM
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This is not news to most middle class folks. Here's a prediction: Things aren't going to get much better for the next few YEARS (really - and no matter who is elected the US President)...well, some investors might do okay, but the real economy on Main Street won't be much better.

Now, I wonder if we can begin to predict the roller coaster DOW? - Let's see, it was way up today, so I'm going to guess it will go down tomorrow.

Jun 13, 2012 8:39AM
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Like a lot of people, the equity in our home fell over 30% in the last 3 years, but you've got to live somewhere so what the heck.
Jun 13, 2012 1:24PM
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I started working 5 days a week after school when I was 15, I worked 40 hour weeks instead of having summer vacation ... after 30 + years of frugal living and hard work, I had amassed a reasonably large net worth ... wife decided she missed out on some fun in her life and got a boyfreind ... went from 2 nice incomes and 1 small mortgage to 1 income and 2 mortgages ... anything liquid went to the attorney, retirments funds went to the ex --- the real loser ... my daughter who should have had the life of a carefree kid - the economy didn't kill me, the divorce did .. comsider that if you feel "cheated" by your spouse - life is what you make of it.
Jun 12, 2012 8:03PM
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Never really thought of my home as part of my "net" wealth. Course if I owned a few more then that would have been a different horse. Inflated home prices and people using them as piggy banks were part of our problem. Got to live somewhere and with our home paid off their really is nowhere to live any cheaper, at least for us.
Jun 12, 2012 9:44PM
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Why I just heard the President say that the private sector was doing fine! I guess that really means he and his buddies are doing fine.
Jun 12, 2012 9:27PM
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funny this data is only from 2010, I bet its dropped another 20% since then and the average credit card balance was over $10,000. disgusting.
Jun 13, 2012 9:49AM
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Still liking that hoax and chains folks????
Jun 12, 2012 9:27PM
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Elect Obama again and your net worth will continue to shrink and more and more people will be on government assistance. 
Jun 12, 2012 7:22PM
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 "$126,400 in 2007 to $77,300 in 2010"

 

Both numbers are scary-low considering what it costs to get through retirement.

 

What I'm curious about is how $77k compares with the average cost of someone dying these days. I bet that's really scary.

 

Jun 13, 2012 2:11AM
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Your family's net worth fell 40%  There's your hope and change, suckers. But then again, give a  brotha a second chance.  Forward!  Let's all see how much less our net worth can be in 4 years. 
Jun 13, 2012 12:20AM
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  I once again no mention of the real victims of these idiot bakers...The construction workers. We are the ones that not only have lost out "net worth" but our very lively hood and careers and all from no fault of our own...just worked our asses off to scratch a living only to have these fat cat f***s Wreck the economy, ruin our jobs and then come to forclose on us when THEY are the ones that distroyed our means of income
Jun 12, 2012 10:33PM
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How's that trickle down economics, globalization and outsourcing working for ya America? Worked  out great for MITT! Now don't be jealous, little people, the cream rises to the top while the rest f the milk goes sour. You know what they say: major stockholders come FIRST around here and if you don't like it move to Cuba, ya commies
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