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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.

  • 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? 

More from MSN Money

Jun 13, 2012 2:11AM
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 1:57AM
Jun 13, 2012 1:34AM
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 12:21AM

the main problem is the unemployment! jobs for people to be able to earn a living!

when a crisis gets to the point of causing everything to cra**** time to fix the problem.

LEAVE THE TAX CUTS IN PLACE FOR ANOTHER YEAR OR TWO do not cut spending as much as planned this next year, only cut spending a little, and try to eliminate waste, then require everyone to pay cash money on the budget deficit, millionaires, banks, oil companies, insurance companies drug companies, etc, everyone on a sliding scale, to raise two trillion dollars, really fast, and pay the budget deficit off in full, use the money left over, to do infrastructure, in the country, then pay all the unemployed around 17 million of them 600.00 dollars per week tax free for two years, and let them find work, but tax the work they find, then take 28% from the top of the 600.00 dollars,  and give that to the states every week for two years, this will stabilize the states, and create jobs, and bring in tax revenues, cut these 17 million off of any subsidies for two years, do this even if the debt ceiling needs to be raised to do it the economy will take off like a rocket, the debt will come down, because of the millions of people working, and paying taxes, the country will save on everything, food stamps, etc. and lower crime, it would help to fund medicare, and SS, the soldiers returning could all find work, the ones paying the cash could get tax breaks to get a lot of their money back but they should be proud to refuse those tax cuts, as part of doing their patriotic duty, they would not suffer any hardship for doing it, [example if a millionaire paid fifty thousand dollars, or a billionaire paid a million dollars, a bank, , the country is facing a crisis the congress, and the President should do this and worry about elections later!!! It would probably help the real estate markets to, I know small business would recover, manufacturing would go through the roof, what are we waiting for we have the means to fix this problem overnight???

Jun 13, 2012 12:20AM
  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 11:52PM
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 12, 2012 10:38PM
AlI I can say is -- SUCKERS! How does it FEEL being at the mercy of the investing and spending whims of the rich, ya brown nosing upper class apologists
Jun 12, 2012 10:33PM
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
Jun 12, 2012 10:26PM

If 2000 people banned together, and started pooling 500 dollars per month it would be easy to buy the land, build warehouses, stock them with survival supplies, and build housing, and even some luxury things, like swimming pools, tennis, basket ball courts,  a club house, 500.00 by two thousand would be a million per month, it would not take long to pay for all this, and try to prepare for a crisis if it were to come, the worst that could happen is they would own it, and not need it, but it would be good to have it if needed, it seems like it would be interesting anyway!!!

I think it was on [discovery] about the doomsday people!!! 

Jun 12, 2012 10:09PM
There are groups of people preparing for the future now they are call doomsday people who are stocking up food supplies, water, all kinds of things, even weapons, and they practice all the time learning to use the weapons, and they are banning together and building gated communities, when everything crashes they think they will be mobs of people running wild killing stealing, and other, I used to think they were really going overboard, and I still do hope that turns out to be true, and everything will work out, the economy will come back people will have jobs, etc. but I really am seeing things in high places that makes me wonder if they are as over the top as I thought they were! well it does seem like it could get pretty bad if the leaders keep fighting  instead of working for the country,, and trying to do to much outside the country while the country is falling farther behind!
Jun 12, 2012 10:06PM
Wow!  That's bad news.  I did my personal calcs and it's about right.  Depressing.
Jun 12, 2012 9:59PM

given that obozo wants to destroy america...he was being honest with his comment that the private sector is doing well...

Jun 12, 2012 9:57PM
Jun 12, 2012 9:44PM
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
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 12, 2012 9:27PM
Elect Obama again and your net worth will continue to shrink and more and more people will be on government assistance. 
Jun 12, 2012 9:15PM

Why say anything about peoples net worth? why should anyone be concerned ?

Why give advice to people as to what they should do to prepare for the future?

When it happens to these people its important, when it happens to others its not important!

who ask anyone ? when people are up and everything is going their way they seek privacy, I've got mine type attitudes, now its what happened to mine attitudes, waiting for a hand out, well respect the privacy of others, they don't want to know how much someone lost, get up and start over, like others did for years while most walked by and could not care less, or drove by in their luxury cars, and did not even notice!!!

How many people squandered their money for years? now want a hand out?


Jun 12, 2012 8:40PM

Eggs in one basket... 

Untrue. People invested in homes because banks made mortgages on them based on solid evidence of value and sustainability as collateral. There is a constant attempt to point the finger at the borrower homeowner. Sorry... this is entirely the fault of bankers and greed. IF, in 2008, We the People had a real Congress that recognized- what the future would like like with re-occurring irresponsible lending and stopped it, by now here in 2012, we would just be repairing the economic damage. Instead, the adverse agenda of the Party of No and the lame attempts by Obama's team to help borrowers but not fix the employment issues first has prolonged repair while exponentially expanding the damage. JOB RECOVERY as a Stimulus could begin that healing while nipping a lot of future catastrophes, but without a cooperating government, we stand no chance of it.

Jun 12, 2012 8:29PM
The article doesn't describe the future correctly. We have too much unearned income and weath generation by younger generations today. Did you think the ones you screwed out of jobs, income and nest eggs will go away? No. For a fact, cutting the legs outfrom under or off viable workers means you get to care for them later when they aren't viable. So... consider what greed has done for YOU... the Gross National Obligation will be enormous, while Output is negligible because button pressing and paper pushing aren't domestic products. In fact, the globe will likely discount them completely as the restructure of global societies demands real output to offset platforms. Personally, I preferred working hard when I was younger and enjoying some life as I aged. Youth will have played too young and will pay for the rest of their lives. Even younger generations will shun the corrupt of today, forming a sort of pimple to squeeze until all the wrongs are righted or settled. So many middle aged started at or near the bottom. To end up there makes this life a draw. To have gotten everything for nothing kids, and then pay miserably for the folly, makes you losers. There is still time to fix this... job recovery, learning legitimate skills, letting financial control go. It's up to you and you alone.  
Jun 12, 2012 8:14PM
Too many people put all of their eggs in one basket - their home.  Stocks didn't do any better in 2008, but if you didn't sell, your're probably back to even by now. Bonds and gold both did well during that period.  Just shows that you need to stay diversified.
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