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.
Much of it? How about almost all of it. Anyone who owns a house easily lost $100,000 of fictitious value after the collapse of the housing market. The drop in fictitious (unproductive) wealth is only crushing because real wages have been flat for 30 years, and most middle-class types didn't notice or mind this stagnation because they were tricked into seeing themselves as "investors," "entrepreneurs," "movers and shakers." Capitalism was doing its magic for them, their homes laid golden eggs, and the living was so easy. But reality eventually bites. Now their homes have no value, their state (which was gutted by every president since Reagan) offers few or no safety nets, and their wages remain flat—if they are lucky ("...median family income fell to $45,800 from $49,600 in 2007"). How can you not know all of this? This is America today.