Net Worth of American Families Plunges 40% In Three Years
According to a shocking new study by the Federal Reserve on the effect of the recession on wealth in the private economy, the average net worth of American families tumbled by 40% in three years — to approximately 1992 levels.
These sobering statistics serve to reemphasize just how far we have to go to get back to where we were.
According to The Washington Post, the Federal Reserve study found that the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010.
The data represent one of the most detailed and authoritative accounts of how the economic downturn has changed the outlook of family finance. Over just three years, Americans saw progress that took nearly a generation to accrue vanish. Expectations of retirement which depended on the supposedly inexorable rise of the stock market have been proven cruelly illusory for vast swaths of the middle class. Home ownership, once seen as a trustworthy path to wealth, is now widely considered a detriment.
These findings illustrate the depth of the pain and disillusionment of the financial crisis, and how far from healing many families are. If the recession has set us back 20 years, the Federal Reserve says, the road going forward is likely to be gruelling and long. So far, the country has seen only an anemic and tentative recovery.
"It's hard to overstate how serious the collapse in the economy was," asserts Mark Zandi, chief economist for Moody's Analytics. "We were in free fall."
The recession struck the middle class the hardest. The fed found that only half of middle-class Americans have held fast on the same economic rung in the last four years. Their median net worth — the net value of assets such as homes, autos and stocks minus any debt — saw the largest drops. The median net worth of the country's wealthiest families' median inched upward by comparison.
Americans have tried to rebalance their family budgets but find it difficult to repair the damage.
This would seem, superficially, to support the Obama campaign's spin that the situation he inherited was far worse than anything any president has had to confront since the Great Depression. But a closer look reveals otherwise. The inescapable fact remains that President Obama's policies have either not helped or made matters worse. They constitute a far more compelling argument to voters at this point than any theoretical rewriting of history.
At any rate the issue isn't historical, but rather the nature of current and future events. Neither of these bodes well for Obama.Read More...