Average American Net Worth Drops 23%

As Home, Stock And Business Values All Tanked, Recession Ate Away At Americans' Worth From Dec. '07 To Oct. '08

(AP)  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.

[irmcvet971]

If he was not whining then what do you call it. So some guy was lucky enough to marry a woman with money. Hell that was your beloved presidential candidate in 2004 that could not decide if he voted for or against something. Oh wait, he voted for it before he voted against it. Yeah, real winners!

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!

[irmcvet971]

What the hell are you pissed about? This person is not living off of the taxpayers like most of you others are? Go stick it if you don''''t like that someone has money. I bet you must hate Clinton for making $200,000,000 the last 8 years too.

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

[irmcvet971]

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 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

[exusmcsgt]

I work 20 hours a week at a bookstore. Its worked out quite well.

Posted by otiswestfall at 04:06 PM : Feb 13, 2009

It''s nice to know that being kept agrees with you...

[exusmcsgt]

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 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.

[beach671]

No other country will loan more money to Uncle Sam so the Democrats spending plan will nullify your Savings Accounts and T-Bills when hyperinflation takes effect.

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.

[otiswestfall]

My wife''s father set up her trust fund so that the 1.5 million she inherited had to stay in treasury bills. At first I wasn''t real excited about the extremely low rate of return. Now I''m grateful for the 1% return and no loss of principle.
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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.
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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.

[mytoosense]

My wife''''s father set up her trust fund so that the 1.5 million she inherited had to stay in treasury bills. At first I wasn''''t real excited about the extremely low rate of return. Now I''''m grateful for the 1% return and no loss of principle.
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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.

[mytoosense]

The middle class started losing ground nine years ago.

May Bush, Cheney, Delay and the rest rot in Helll soon.

[endrepubs]

Most Americans don''t even have any retirement money and many don''t own homes. The one''s that do saw much more than a %23 drop. Many people saw a 40%-50% drop if they had a substantial amount of money in a stock 401K account and owned their own home. Those can only wish it was a 23% drop.

[neonink]

Guess we all got too high up on the food chain and they had to break us down again...

Now get back to work; while Madoff, et al, look down at us...

[otiswestfall]

My wife''s father set up her trust fund so that the 1.5 million she inherited had to stay in treasury bills. At first I wasn''t real excited about the extremely low rate of return. Now I''m grateful for the 1% return and no loss of principle.

[gowens1]

Average American Net Worth Drops 23%

But you can bet George Bushes and *** Cheneys net worth went up , along with all their friends !!!

[cydygitt1]

Ronnie Raygun would be proud...

Posted by hadenough43
=================

Yep...."ronnie the rat" raygun started the decline of the middle class almost 30 years ago, by introducing "trickle-down" lunacy for his wealthy cronies, as offshoring jobs for the corporate elite got underway and republiCON deficit spending from borrowed money became the norm.

[kirstinharr]

For some of us, there is time to make up the loss. What does a retired 70 year old do when one fourth of his or her income is gone?? There are no years to make up for the losses. This country could see so many more elderly folks living on the streets...

[irmcvet971]

Give ME more Trickle Down! I want MORE fascism!! What''s not to like? The American Standard of living is in the C-R-A-P-P-E-R and those who put it there act like it''s just NO big deal. The Fascist who lead the Republican Party today have their heads up their butts and are doing ALL in their power to prevent any change in direction for this nation. WHO votes for these losers??

[cheetah-man7]

I''m glad that the title of the article includes the word "average" - as I have lost far more than 23%. Thanks, Repulicans! May you ALL rot in HE11....

[elramees]

Yeah, for eight years, the Rebs (oops!) Republicans were bewitching Americans with all those feel good slogan lies as "family first", "survival", and "neighbors"; while, at the same time, they were undermining the Constitution, Bill Of Rights, and America''s middle class. Now, we''re experiencing its wind-damages.

[bridgit5]

Why on earth do you need a second home? So over the top,taking out a big loan for a second home, hoping the hapless renters will pay it off for you. But what happens when the renters can''t pay high rents anymore, due to econmic woes? You are left with the bundle.

[andor3]

"I will cash in my IRA and pay off my $43,000 share of the debt, + 10% early payment fee, IN FULL - TODAY - NOW if Obama and the federal government will just promise that they will no longer borrow any more money"

that is like saying you would only put your money in a bank that would not loan out any money--they would be out of business in a week.