Family Net Worth Fell Almost 40% Between 2007-2010

Posted By on June 11, 2012

How challenging has it really been for families these past few years?

Well if you’re in college or just starting out and able to pay the bills, finding work or able to keep borrowing for school … then you might not notice much (can you tell I’m talking with my college age son while he is home this summer?) If you’re a homeowner or someone trying to create equity, then it is very noticeable. The numbers crunchers at the Federal Reserve as reported by a WSJ blog post points out just how much impact is being felt … and probably for years to come.

Families’ median net worth fell almost 40% between 2007 and 2010, down to levels last seen in 1992, the Federal Reserve said in a report Monday.

As the U.S. economy roiled for three tumultuous years, families saw corresponding drops in their income and net wealth, according to the Fed’s Survey of Consumer Finances, a detailed snapshot of household finances conducted every three years.

Median net worth of families fell to $77,300 in 2010 from $126,400 in 2007, a drop of 38.8%–the largest drop since the current survey began in 1989, Fed economists said Monday. Net worth represents the difference between a family’s gross assets and its liabilities. Average net worth fell 14.7% during the same three-year period.

Much of that drop was driven by the housing market’s collapse. Families whose assets were tied up more in housing saw their net worth decline by more. Among families that owned homes, their median home equity declined to $75,000 in 2010, down from $110,000 three years earlier.

READ More

Comments

  • Steve

    Good thing we bought at the bottom, I suppose.

    Needless to say, this is why I subscribe to the Boglehead investment and finance philosophies.

    http://www.bogleheads.org/wiki/Main_Page 

    • Great link Steve … I’ve bookmarked and am looking forward to reading a bit. Yes, I think you are in a relatively good position IF we are actually “just” in a down economic cycle. My worry is that we’re saddling ourselves with debt and long term commitments at rates we can’t keep up with and that we aren’t willing to address the underlying problems. Something has to change — going the big government direction of centralized control ISN’T what gave us the prosperity which made the United States so “exceptional.” I think the risk/reward in starting a small business today is less attractive (even with cheap money) than it has ever been … at least in my lifetime. Liberal/progressive thinkers may disagree, but what I’m seeing from across the pond doesn’t offer convincing evidence they have found the balance between government control/oversight and individual freedom either.

      • Steve

        Whoops, forgot to check back in for a reply!

        Anyway, yeah, it’s a great group of folks. Lots of advice and smart people on the forum. I’ve read their guide to investing (book form) and just picked up another 6-8 they recommend reading. Definitely a wise philosophy to follow, in my opinion.

        The whole debt thing is a mess and it’s certainly not headed in the right direction. Not sure how I feel about everything on a macro sense just yet, but I’m certainly doing what I can to control our own things.

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.