Average American Net Worth Drops 23%
The recession has cut many Americans' net worth by about 20 percent as the value of homes, stock portfolios and businesses have plummeted, the Federal Reserve said Thursday.
The Fed said the average net worth of American households plunged 22.7 percent since the recession began in December 2007 through October, when the report was prepared. The median net worth, or the midpoint between the wealthiest and poorest, fell 17.8 percent.
The impact has disproportionately fallen on the wealthiest households and those between the ages of 55 and 64, a Federal Reserve economist said. Net worth tends to peak in that age bracket, as retired Americans begin to spend down their savings.
If the value of second homes and businesses are excluded, the Fed said in its report, average household net worth fell 12 percent, which reflects that such assets are "relatively concentrated among wealthier families."
The decline in home prices and stock portfolios in 2008 wiped out gains in net worth from the previous three years, the Fed said. Median household net worth increased 17.7 percent between 2004 and 2007, but fell 3.2 percent from 2004 through last October, according to the Federal Reserve's Survey of Consumer Finances.
The central bank conducts the survey of more than 4,400 households every three years. The survey was completed at the end of 2007, and Fed economists used stock market and home price indices to calculate changes through October.
The report also includes some data that illustrate the inflating credit and housing bubbles that popped with such disastrous results.
Earlier this decade, Americans took out much more debt to finance the purchase of second homes and make other real estate investments, the report showed.
That type of borrowing increased to 10.1 percent of all debt in 2007, the survey found, up from 6.2 percent in 2001. Mortgage debt on primary residences, meanwhile, remained relatively constant as a share of all debt over that time.
And while the total debt burden of U.S. families didn't change much from 2004-2007, the percentage of debtors that owed an amount equal to 40 percent or more of their income increased to 14.7 percent in 2007 from 12.2 percent three years earlier, according to the Fed's survey.
The increase was particularly noticeable among higher-income earners. For those in the second-wealthiest group - between the top 60 percent and 80 percent of incomes - the percentage of borrowers that owed 40 percent or more of their income jumped to 12.7 percent in 2007 from 7.1 percent in 2004.
© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Fed said the average net worth of American households plunged 22.7 percent since the recession began in December 2007 through October, when the report was prepared. The median net worth, or the midpoint between the wealthiest and poorest, fell 17.8 percent.
The impact has disproportionately fallen on the wealthiest households and those between the ages of 55 and 64, a Federal Reserve economist said. Net worth tends to peak in that age bracket, as retired Americans begin to spend down their savings.
If the value of second homes and businesses are excluded, the Fed said in its report, average household net worth fell 12 percent, which reflects that such assets are "relatively concentrated among wealthier families."
The decline in home prices and stock portfolios in 2008 wiped out gains in net worth from the previous three years, the Fed said. Median household net worth increased 17.7 percent between 2004 and 2007, but fell 3.2 percent from 2004 through last October, according to the Federal Reserve's Survey of Consumer Finances.
The central bank conducts the survey of more than 4,400 households every three years. The survey was completed at the end of 2007, and Fed economists used stock market and home price indices to calculate changes through October.
The report also includes some data that illustrate the inflating credit and housing bubbles that popped with such disastrous results.
Earlier this decade, Americans took out much more debt to finance the purchase of second homes and make other real estate investments, the report showed.
That type of borrowing increased to 10.1 percent of all debt in 2007, the survey found, up from 6.2 percent in 2001. Mortgage debt on primary residences, meanwhile, remained relatively constant as a share of all debt over that time.
And while the total debt burden of U.S. families didn't change much from 2004-2007, the percentage of debtors that owed an amount equal to 40 percent or more of their income increased to 14.7 percent in 2007 from 12.2 percent three years earlier, according to the Fed's survey.
The increase was particularly noticeable among higher-income earners. For those in the second-wealthiest group - between the top 60 percent and 80 percent of incomes - the percentage of borrowers that owed 40 percent or more of their income jumped to 12.7 percent in 2007 from 7.1 percent in 2004.
Popular on CBSNews.com
- Port Authority releases photo of One WTC workers at dizzying heights
- Washington state bridge collapses 20 Photos
- Best U.S. beaches 2013 10 Photos
- Bridge collapse blamed on tractor-trailer 311 Comments
- Frantic 911 calls reveal chaos in Okla., following tornado
- Judge: Ariz. sheriff's office profiles Latinos 125 Comments
- Deadly Angel Flight crash in upstate New York
- Clean-up efforts underway in Okla. 29 Photos
Posted by IndependentI at 07:15 AM : Feb 14, 2009
As ALWAYS with you fascist! Attack the messenger and NEVER address the ISSUE. PLEASE tell us ALL what the INCOME of Clinton has to do with THIS? Don''t think to hard though... wouldn''t want you to hurt yourself. Sieg Heil Rush!
Posted by IndependentI at 10:46 PM : Feb 13, 2009
He isn''t "pissed off" for crying out loud and what does the income of Clinton have to do with this. You fascist get more ridiculous with each passing hour! You have NO position that people will listen too. You can''t respond to the issues at hand so you ATTACK the messenger! All of you in the Reich are a sad group indeed! Sieg Heil Rush
Posted by Beach671 at 05:35 PM : Feb 13, 2009
Uh Huh! Fascist and their ability to think for themselves, or the lack thereof is absolutely AMAZING! So in your poor SMALL tortured little mind the News Media and our New President are to blame here! They are responsible for a 23% decline in our Net Worth? Never mind that the VAST majority of that loss took place BEFORE Obama took office OR before it became an Issue for the media and the election. It''s Amazing you swastika huggers can actually get through a day without directions from the Reich!! Geeezzzzzzzzzzzzz!! Folks I have a dog smarter than this Ditto Head!! Sieg Heil Rush
Posted by otiswestfall at 04:06 PM : Feb 13, 2009
It''s nice to know that being kept agrees with you...
Posted by Beach671 at 05:35 PM : Feb 13, 2009
Yes! By all means! We need to return to the good old days of Dubya and lie through our teeth that it''s simply a "slowdown", as he termed it.
Sheesh.
Which it will. You can''t print out a Trillion dollars from a printing press and not expect inflation.
The news media and President Soetoro have been killing our net worth with the doom and gloom they keep preaching. If they would keep their mouth''s shut the economy would come back up.
----------------------
Posted by otiswestfall
Good for you, now, how big a factor was your wife''s trust fund when you were considering her as your sugar mama.
-------
Posted by mytoosense
**************************
Well I was skeptical at first. She had a good income from her accounting job. Money was a factor, but at the time her leggs were more important to me. Ten years later, she still has the leggs, thank God, still has her job and her dad''s money. I work 20 hours a week at a bookstore. Its worked out quite well.
----------------------
Posted by otiswestfall
Good for you, now, how big a factor was your wife''s trust fund when you were considering her as your sugar mama.
May Bush, Cheney, Delay and the rest rot in Helll soon.