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

Rate this post


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:
0
 

0 responses to “Americans lost 40% of our net worth in just 3 years

  1. lowtechgrannie

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

     
  2. Hopeandchange sucks!

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

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

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

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

     
  6. 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 lost in the Great Depression.
    Since the trough in household wealth, $11.6 trillion of the lost wealth has been regained under Obama. The stock market went on a tear starting a few weeks after the Recovery Act was passed, highlighted by the fastest doubling of the S&P 500 index in U.S. history. Even real estate prices are now beginning to recover from the greatest housing bust in our history.
    For people to blame Obama, who has helped regain much of the wealth that was lost under Bush, while sarcastically regurgitating the “stop blaming Bush” talking point, is breathtakingly clueless. It is going to take many, many years to clean up Bush’s mess, first the economic mess, then the epic fiscal mess. Recovering from the massive housing bust and the enormous loss of wealth under Bush is a long-term proposition.
    That massive loss of wealth occurred because Bush, Greenspan and others believed that the financial sector could police itself and the economy could right itself (although Bush recanted this by signing the TARP legislation). Sadly, you people are champing at the bit to elect someone with those same failed beliefs. Some people never learn.

     
    • 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 still down as my current job pays 5% less than what I was making before.
      Still blaming Bush? Some people never learn.

       
    • Wow. It is simply amazing that you, Thing55, think the writers of Fellowship of the Minds to be stupid and uninformed. We are fully aware that the housing bubble burst in the last year of the George W. Bush’s administration, and that the elites of BOTH the Democratic & Republican parties think the American people to be fools.
      Unlike you, however, we also know that it was a Democrat, Congressman Barney Frank, chair of the House Finance Committee, who was responsible for much of the failure of Fannie Mae and Freddie Mac. Instead of overseeing FM/FM, Frank enabled the reckless mortgage lending policy of FM/FM because he was getting campaign money from FM/FM.
      As for your hilarious assertion that “Obama, who has helped regain much of the wealth that was lost under Bush”
      ROFLMAO! Thanks for the belly laughs! 😀
      Seriously, Thing, if you’re gonna lie, at least try and be just a bit credible.

       

Leave a Reply

Your email address will not be published. Required fields are marked *