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.
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.
"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.
- Bing: Median vs. mean
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?
More from MSN Money
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.
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.
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.
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.
"$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.
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