The net worth of U.S. families plummeted by nearly 40% according to a study released today by the Federal Reserve. The Washington Post indicates that this is the lowest level in 20 years. Median family income also dropped almost 8% over the same time period.
These findings appear to be further evidence that despite what President Obama said on Friday, the private sector is not doing fine.
According to the report, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances, “although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices.”
Median family net worth based on study data collapsed from $126,400 in 2007 to $77,300 in 2010 (38.8%). The Fed report maintains that if primary residences and the associated mortgage debt are excluded, the median of American families’ net worth is reduced from $126,400 to $42,300 in 2007 and from $77,300 to $29,800 in 2010.
The decline in net worth was also associated with the decrease in the level of unrealized capital gains in stocks, mutual funds, or other investments.
The New York Times points out that although the data goes back to 2010, “fresher sources of economic data make clear that most households have since seen only modest increases, at best, in wealth and income. ”
The Fed report also notes that “Recovery from the so-called Great Recession has also been particularly slow.”
The Fed (shorthand for the Federal Reserve) is the central bank system of the United States.
Do you still have faith in President Obama’s handling of the economy?