Americans lost 40% of our net worth in just 3 years


The net worth of Americans fell 40% in three years, wiping out two decades of our wealth.
Ylan Q. Mui reports for the Washington Post, June 11, 2012, that the Federal Reserve said today that the median net worth of families plunged by 39% in just three years, from $126,400 in 2007 to $77,300 in 2010.
The data, based on a federal government survey conducted every three years, represents one of the most detailed looks so far how Americans’ finances have weathered the economic downturn. “It’s hard to overstate how serious the collapse in the economy was,” said Mark Zandi, chief economist for Moody’s Analytics. “We were in freefall.”
The biggest drops occurred among middle-income Americans, whose wealth was inextricably linked to the housing market boom and bust. Meanwhile, the wealthiest families actually saw their median income rise slightly.
The implosion of the housing market inflicted much of the pain. The value of Americans’ stake in their homes fell by 42% in those three years to just $55,000. The poorest families suffered the biggest loss of wealth from the drop in real estate prices. But middle-class Americans rely on housing for a larger part of their net worth. For some, it accounts for just over half of their assets. That means every step downward is felt more acutely.
Rakesh Kochhar, an economist at the Pew Research Center, calls this phenomenon the ”reverse wealth effect.” As consumers watched the value of their homes rise during the boom, they felt more confident in spending more money even if they did not actually cash in on the gains. Now, the moribund housing market has made many Americans wary of spending, even if their losses are just on paper.
According to the Fed survey, that paper wealth — or what is officially called unrealized capital gains — shrunk 11% to about a quarter of American’s assets.
The findings track research Kochhar released last year that showed a dramatic drop in household wealth during the recession, particularly among minorities. That study found record high disparities in wealth between whites and blacks and Hispanics.

What this means for most Americans — you and me — is that our net worth is back to where they were in 1992. Twenty years of wealth just went Pffft.
The news gets worse.
Not only are we poorer by 40%, most of us are in poor financial shape to withstand or survive another setback.
Though Americans made progress in paying off their credit cards, the median value of family debt did not change between 2007 and 2010. The percentage of families saddled with debt greater than 40% of their income also stayed the same. Worse still, more families are reporting they’re behind on their bills.
In fact, a good case can be made that the U.S. economy is not in a “great recession.” We are in a Depression.
~Eowyn

Please follow and like us:
error0
 

Leave a Reply

avatar
  Subscribe  
Notify of
lowtechgrannie lowtechgrannie
Member
lowtechgrannie lowtechgrannie

This can’t be true! Didn’t he say just last week that the private sector was doing swell?

DCG
Guest

Hopeandchange sucks!

genomega1
Guest
genomega1

Reblogged this on News You May Have Missed and commented:
Americans lost 40% of our net worth in just 3 years

Anonymous
Guest
Anonymous

Of course… It’s Bush’s Fault! (See, Demo-rats, I knew you could.)

Anonymous
Guest
Anonymous

How left/liberals could still believe that boggles the mind, but they like it better than the truth.

Caroline Niven-Roy
Guest

Obama go home…

Scott Sholar
Guest

Thank you for sharing, and God bless you. Here is my latest post: https://scottsholar.com/2012/06/11/political-vs-spiritual/

Thing55
Guest
Thing55

Wow. It is simply amazing how out of touch with reality you people are. The implication of your comments is that this is Obama’s fault. Let me clue you in on a few inconvenient facts. First, the peak in U.S. household and nonprofit wealth was in the third quarter of 2007. From there, this measurement of wealth fell a whopping $16.2 trillion to its trough at the end of the first quarter of 2009. The percentage loss of wealth in the Bush recession, which officially ended in June 2009, was 24%, more than twice the percentage of wealth that was… Read more »

DCG
Guest

Mr. Messina, is that you? Let me tell you about some facts of my personal wealth and it’s loss during the last three years. 1) I haven’t had a raise since 2008. 2) My condo value dived in 2009 and it is worth 31% less now than what I paid for it six years ago. All my friends that own homes are still suffering from depressed values. 3) I just received my stock market monthly report and it was down 15% again. 4) I was laid off last year and subsequently used savings to live on. My savings account is… Read more »