Recession leaves families' net worth static -- or worse
(CBS News) EMMAUS, Pa. - The great recession lasted 18 months but it wiped out two decades of financial gains.
The Federal Reserve said the median net worth of American families, adjusted for inflation, fell back to where it was in 1992, the biggest drop in wealth since the Great Depression.
Rick Snyder has proudly watched his sons grow -- while he's watched his own future, his nest egg, shrink.
Weekly Jobless claims rise to 386,000"I gain, I lose, I gain, I lose... and I really thought I'd be a lot better off by this point than I am now," said Snyder.
The divorced 54-year-old sells holiday decorations and makes $80,000 a year, which puts him above average for Lehigh County Pennsylvania where he lives.
His 401(k) dropped 40 percent during the economic crisis. It is up, a bit, to a total of $150,000 dollars but his investments are not keeping up with inflation.
"I'm planning (to retire) and hoping but, financially, will I be able to? I don't know," said Snyder.
He worries retirement might not come until he's 67 and maybe later.
"I'm not getting ahead," he explained. "I like to use the term - I 'flatlined'... From a decade ago, I'm really no better off from where I was then."
A family's net worth is everything they own minus their debts. The average net worth today is $77,000, about the same as 20 years ago. The biggest reason is the collapse in home values.
Rick Snyder's home is worth less than he paid.
"It hasn't taken as bad of a hit as it has in some other areas but it's still probably down 15-20 percent from what it was at it's high point," he explained.
Near the high point 2007, the average homeowner had $95,300 of equity in their home. That is the part they own free and clear. But in 2010, average equity dropped to $55,000.
Tim Watters is a certified financial planner. He said the middle class is getting squeezed.
"There is a lot of disillusionment out there and there's a lot of feelings that it will never get better," said Watters. It often brings people to the point of very sad emotions - people are in tears sometimes."
Many people think of America as a place where the next generation does better.
"I question that now," said Snyder.
Americans at almost every economic level have lost income and just 52 percent are able to save, the lowest level in two decades. Leaving the next generation to wonder how - or if - they'll ever catch up.
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Also people out you need to stop thinking of a house as an investment, it's place make a home and raise a family or to make a lifelong partnership with your spouse. Buy a house you can be happy with and stay in it.
I took someone's advice before all this to stop seeing a home as an investment - I've always bought a home well, well below my means and didn't suffer during the value drop like many around me.
The private sector can create jobs faster than the government, but the government has to ensure capital markets that are worthy of the public's trust.
Please sign the petition to the U.S. Senate Banking and House Financial Services Committee asking for improved oversight of federal banking and market regulators.
To read more about what we're trying to do and to sign the petition, click here:
http://www.change.org/petitions/u-s-senate-banking-and-u-s-house-financial-services-committees-use-technology-to-provide-oversight-of-u-s-banking-and-market-regulators?share_id=HTpDoOQNJgpe=d2e
It'll just take a minute!
In short, start with Conservatives.
When they elect a moron to lead, and the markets and banks collapse because of deregulation and lack of oversight, when the industries become the benefactors of the wealthy foreign nations, and the plants close because the robber-baron owners can get cheaper labor overseas, then these middle class Conservatives lose their jobs and their income. With no health care, no welfare, no social security, and no unemployment insurance, they lose their savings, their homes, and then their health.
The middle class Conservatives soon remedy their mistake; they become Liberals.
But be of good cheer. In other lands, these newly created Liberals would have risen up and redistributed the wealth the old fashion way... by killing the remaining Conservatives. Here, they elect the Democrats, and under their control, the long Republican-maligned government spares Conservatives the gallows, reregulates the thieves and robber barons in industry, levels the playing field... giving the oh-so grateful Republicans a new government worthy of their ire.
The Tappan Zee Bridge cost just $81 million to build in 1951, or perhaps $690 million in today's dollars, and it's still standing 60 years later. There is something very wrong if it costs 20 times that much to build the same bridge today. Where is all that extra expense coming from? Union wages? Environmental regulations? Bloated contracts and waste? Payoffs and bribes?
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Partially from environmental regulations, but not much from that.
Not from the Union wages in the slightest.
Most of the extra expense is coming from the skyrocketing costs of materials, which I don't really understand why those costs of materials are going up so much. Forget about China.... most of their stuff is made in country out of materials mined in their country.
I really think that there is some price-fixing/gouging going on today.
For the past 30-plus years, the wealthiest Americans have worked assiduously to shift income and wealth from the middle class and the poor to the top 1 or 2 percent. Deregulation came first, in the '70s, followed by the "voodoo economics" of "trickle down" in 1980. Then corporations shut down defined-benefit pension plans and replaced them with 401(k)s, which shifted ALL of the investment risk of retirement planning from employer to employee. And as health care costs rose, employer contributions held steady or decreased, leaving employees to pay higher premiums, deductibles, and co-pays.
Then, in the new century, the Bush tax cuts gave ordinary Americans a few hundred dollars each as they were giving millionaires and billionaires hundreds of thousands of dollars each. Ten years of THAT disparity shifts A LOT of wealth from one class to another.
Since the '70s, virtually ALL Republicans and all TOO MANY Democrats have enlisted on the side of the "job creators," most of whom create absolutely no jobs at all. The secular "religion" known as "free market fundamentalism" justified all that wealth-shifting: after all, rich people are rich because they are moral, so it must be moral to pass laws that will make them even MORE rich. Right?
I don't agree. I don't think the majority of Americans agree. But if we continue to elect maniacs who, no matter which church they attend, are true believers in free market fundamentalism, we'll continue to see our net worth fall and the "entitlements" we paid into for 40, 50, 60 years destroyed because "we can't afford them." The fact is that we CAN afford them, if the people who have made out like bandits for the last 30 years back just a small share of their ill-gotten gains!
I don't think the Democrats are anywhere near part of the issue. The true ones anyway. Obama is just a more 'liberal' Republican when you get down to brass tacks, he is not a true Democrat like we had in the 1980's.
Obama doesn't own a bank. He's not a director on a bank board. He doesn't run the Federal Reserve. Why is HE to blame?
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Not fair is it? Wasn't fair for President Bush, isn't fair for President Obama. But Harry Truman was right when he said, "The buck stops here". Or as President Clinton put it, "It's the economy, Stupid." And since I'm on cliches, I'll end with "If you can't stand the heat, get out of the kitchen."
I guess I'm going to revise my mantra to include Iraq,
"The American Suicidal Mission called AFGHANISTAN and Iraq" is coming home to roost.Not only are the Walking Dead arriving back home from those ill-advised WARs.
Now they'll have to learn to navigate in this social-economic distaster which is a direct
result of the Practitioners of Deception,those political charlatans that convinced the Majority of Americans that there will be no suffering endured in these WARs.
In some circles this could be considered CRIMINAL CONDUCT,but here in America
it's called "the good old boys doing their best".