Originally published June 13 2012
Wealth of Americans plummets 40 percent during Obama's reign in office
by J. D. Heyes
(NaturalNews) If you have wondered whether all of the bad news you've heard regarding home values, real wages and other economic data since the beginning of the Great Recession in 2008 is true, wonder no more.
It is. And what's more, it's likely a lot worse than you thought.
According to federal figures, the average American household's wealth declined by a staggering 40 percent since President Obama took office, wiping out nearly 20 years' worth of wealth accumulation and growth; middle-class families bore the brunt of that decline, by the way (what else is new?).
In real numbers, that's a decline from $126,400 in 2007 to $77,300 in 2010, which is about where Americans were in 1992.
Those figures and others were contained in the Federal Reserve's June 2012 Bulletin, and the economic picture it paints for American families - gathered via the Fed's Survey of Consumer Finances - is bleak, to say the least.
Hard to 'overstate' the seriousness of the collapse
For example, the survey found that "the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent," according to the Fed bulletin, a decrease that was "widespread across demographic groups, with only a few groups experiencing stable or rising incomes."
"The decline in median income was most pronounced among more highly educated families, families headed by persons aged less than 55, and families living in the South and West regions," the bulletin continued. "Real mean income fell even more than median income in the recent period, by 11.1 percent across all families."
The depth of the damage, if it truly set most Americans back some 20 years, means any rebound will be prolonged as well.
"It's hard to overstate how serious the collapse in the economy was," Mark Zandi, chief economist for Moody's Analytics, told the Washington Post. "We were in free fall."
Only about half of middle-class Americans stayed at the same economic level during the downturn, the Fed survey indicated. Their median net worth - home values, car values and stock values, minus debt - fell the most. And while many are still trying to balance family budgets, they are finding that difficult to do.
The survey found that fewer families are carrying balances on their credit cards, and of those that do, the balances are lower. In fact, median balances fell 16 percent from $3,100 in 2007 to about $2,600 in 2010. Also, the Fed survey found that the number of Americans who have no debt at all rose to about a quarter of all families.
Median and mean wealth declined
That progress, however, has been all but mitigated by other economic factors, which has left the median level of family debt the same. For instance, the survey found that more families are taking education loans; about 11 percent reported being at least 60 days late paying a bill, which is up 7 percent from 2007; and the percentage of families whose debt was greater than 40 percent of income stayed the same as well.
On top of that, the survey found that Americans, overall, were taking home less pay, indicating that a wage stagnation that is only likely to get worse as unemployment remains high. Median income fell about 8 percent to $45,800 in 2010, while the median value of stock-market retirement accounts fell 7 percent, to $44,000.
"Data from the 2007 and 2010 SCF show that median income fell substantially and that mean income fell somewhat faster, an indication that income losses, at least in terms of levels, were larger for families in the uppermost part of the distribution," said the bulletin. "Overall, both median and mean net worth also fell dramatically over this period - 38.8 percent and 14.7 percent, respectively. Changes in housing wealth and business equity were key drivers in those wealth changes."
The survey said the housing market implosion is what has led to most of the economic suffering. The Fed notes that the median value of Americans' stake in their homes fell by 42 percent between 2007 and 2010, to $55,000. And in most of the country, the housing market has yet to even begin to recover.
"Recovery from the so-called Great Recession has also been particularly slow," said the bulletin.
Sources for this article include:
http://www.washingtonpost.com
http://www.federalreserve.gov/pubs/bulletin/2012/PDF/scf12.pdf
http://www.businessinsider.com
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