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Post by jeffolie on Jun 11, 2012 15:17:41 GMT -6
June 11, 2012 Recession crushed middle-class wealth: Fed survey Median net worth fell by $49,100, erasing 18 years of gains (MarketWatch) — The recession crushed the net worth of middle-class families as real estate values tumbled, according to a survey released by the Federal Reserve on Monday. The Fed’s survey of consumer finances between 2007 and 2010, which is adjusted for inflation, showed median income fell 7.7% from $49,600 in 2007 to $45,800 in 2010 and that median net worth fell 38.8% from $126,400 in 2007 to $77,300 in 2010, approximately the level recorded in 1992. /conga/story/2012/06/fedwealthsurvey0611.html 211554 Chart: The rich are really rich accounts.icharts.net/portal/app?p... Median net worth of families, in thousands of dollars . .[/img] The drop was concentrated in middle-class families. Those in the 60th to 79.9th percentile of income saw the biggest drop in wealth, of 40.4%. The second-steepest drop came from those in the 20th to 39.9th percentile of income, of 35%. The top 10% actually saw an increase of 1.8%. The top 10% of earners had a median net worth of $1.19 million, or 192 times as much as the median wealth of $6,200 of those in the bottom 20%. In 2007, the top 10% had 138 times as much wealth as the bottom 20%. In 2001, it was 106 times as much. The Fed’s survey isn’t a surprise — over the 2007–10 period, the U.S. economy experienced its most substantial downturn since the Great Depression — but it sheds more light on the impact of the recession on family finances. The particularly big drop in net worth was largely due to the burst of the real estate bubble. Between September 2007 and September 2010, U.S. home prices fell by 22%, according to home price data from LoanPerformance. That the wealth destruction was concentrated on the middle class makes some sense. For the wealthy, housing is a smaller share of net worth, while for the least wealthy, homeownership is less common. And the survey shows American families in a deleveraging mode. The proportion of families carrying a credit card balance fell 6.7 percentage points to 39.4% in 2010. Among those with a balance, the median balance fell 16.1% to $2,600 in 2010. The share of families with any type of debt decreased 2.1 percentage points to 74.9%, reversing an increase that had taken place since 2001. The overall share of families with any stock holdings declined 2.8 percentage points from 2007 to 2010, to 15.1%; the peak was 21.3% in the 2001 survey. Direct ownership of pooled investment funds (mostly mutual funds) fell by 2.7 percentage points to 8.7% of families in 2010. The fraction of families with retirement accounts fell 2.6 percentage points to 50.4%; the Fed says the overall rate of retirement account ownership has varied around 50% for about the past decade. www.marketwatch.com/story/recess ... =afterbell
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Post by jeffolie on Jun 11, 2012 15:19:25 GMT -6
Ben loves FED studies to prove the obvious.
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Post by jeffolie on Jun 11, 2012 15:41:47 GMT -6
No housing gains likely One of my 2 requirements for a single family housing bull market is rising median income ... no help here ================================== Monday, June 11, 2012 Fed Survey: From 2007 to 2010, Median Family income declined 7.7%, Median Net Worth declined 38.8% The survey shows that, over the 2007–10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent; median income had also fallen slightly in the preceding three-year period (figure 1). The decline in median income was widespread across demographic groups, with only a few groups experiencing stable or rising incomes.Most noticeably, median incomes moved higher for retirees and other nonworking families. The decline in median income was most pronounced among more highly educated families, families headed by persons aged less than 55, and families living in the South andWest regions. Real mean income fell even more than median income in the recent period, by 11.1 percent across all families. The decline in mean income was even more widespread than the decline in median income, with virtually all demographic groups experiencing a decline between 2007 and 2010; the decline in the mean was most pronounced in the top 10 percent of the income distribution and for higher education or wealth groups. Over the preceding three years, mean income had risen, especially for high-net-worth families and families headed by a person who was self-employed. The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent (figure 2).Median net worth fell for most groups between 2007 and 2010, and the decline in the median was almost always larger than the decline in the mean. The exceptions to this pattern in the medians and means are seen in the highest 10 percent of the distributions of income and net worth, where changes in the median were relatively muted. Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices.2 This collapse is reflected in the more... www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdfThis is a portion of table 4 from the Fed Bulletin, and shows the median and mean net worth by income and head of household age for four periods (2001, 2004, 2007 and 2010). The only group (by income) with an increase in the median net worth was the top 10%. There is much more in the survey. www.calculatedriskblog.com/
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Post by jeffolie on Jun 11, 2012 15:55:37 GMT -6
Family Net Worth Drops to Level of Early ’90s, Fed Says NY Times June 11, 2012 WASHINGTON — The recent financial crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said on Monday. The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss. This vast loss of wealth was compounded by a loss of income, as the earnings of the median family fell by 7.7 percent over the same period. The new data come from the Fed’s much-anticipated release Monday of its triennial Survey of Consumer Finance, one of the broadest and deepest sources of information about the financial health of American families. The latest survey is based on data collected in 2010. Figures are reported in 2010 dollars. Unsurprisingly, the report is full of grim news, and although it is news from 18 months ago, fresher sources of economic data make clear that most households have since seen only modest increases, at best, in wealth and income. more... www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html?_r=1&nl=your-money&emc=edit_my_20120611
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Post by jeffolie on Jun 11, 2012 16:08:53 GMT -6
Are you still middle class?
I think of myself as Middle Class.
Ben's changing the meaning of Middle Class makes me wonder how important assets or income should be used to select which class our family belongs in...
How do you think of yourself? Are you still middle class? 2 classes; 3 classes; or 5 classes in America?
Where is the 1% versus the 99%
The Fed applies a breakdown using 20% groups.
The "Middle Class" now is the group of 40% to 60%.
Back in the day, Amercans had 3 classes: upper, Middle Class, lower Now the bean counters had changed all that with a grouping of 20%, whereas Occupy Wall Street and the internet proclaim an 'us v them', no grey area, class warfare of the upper 1% v 99%.
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Post by jeffolie on Jun 11, 2012 16:10:20 GMT -6
Bart posted these charts [/quote] As an average these charts work but not in REAL Life. No person usually is average. The charts for the 1% would look different from the charts for the Middle Class where most have a house and a little home equity but almost no significant amounts of financial things such as stocks, bonds or even pensions. The charts for the lower chart would never have them at all. Are you average ? ... 'where all the children are above average'
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Post by jeffolie on Jun 11, 2012 16:23:28 GMT -6
Are you married?
Yes:
This means you are a minority, in the sense that unmarrieds now out number marrieds in America.
Do you still think you are average?
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Post by jeffolie on Jun 11, 2012 16:51:31 GMT -6
"Middle Class" v fires in Texas, Colorado, New Mexico v Earthquake Insurance
Record fires now are burning houses, farms, grazing land, etc in the region.
What do these fires have to do with if one is middle class? Most 'middle class' in the 'back in the day' definitions had most of their 'wealth' in their home equity ... reduced to zero in unfortunate 'middle class' people in the fire region who had no fire insurance(do you have Earthquake insurance? If not, then in CA one easily could drop to the no or little wealth class)... most upper 20% have significant assets in stocks while bonds often are found amongst the rarified upper 3% who often ride out market drops ignoring the bear markets plus are not house/land rich and strapped for cash.
Ben of the FED ignores fires, assets classifications but do you? No you do not.
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Post by jeffolie on Jun 11, 2012 17:43:01 GMT -6
America did fine before average Americans had to compete with cheap labor and communist well organized Chinese factories. I doubt average Americans would agree they now are doing fine. Average Chinese have seen an increase in their lifestyles as wage now are climbing plus the products available to them have advanced to Western levels in large part to Chinese stealing our intellectual property without significant Western protectionism of intellectual properties. Industrial espionage by China and Russia rank as significant methods the West has lost competitiive advantages, not just the wage differences. Much would be still made in the West if the political will existed to kick out knockoffs and avoid transfers of intellectual properties. Ask Microsoft how operating systems in India and China can use their intellectual property without retalliations or sanctions.
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Post by jeffolie on Jun 11, 2012 19:19:10 GMT -6
Great Recession erased nearly 40% of family wealth Los Angeles Times Washington— The Great Recession took such a heavy toll on the economy that the typical American family lost nearly 40% of its wealth from 2007 to 2010, shaving the median net worth to a level not seen since the early 1990s. "... The fall came with the collapse in the housing market and massive layoffs that slashed people’s incomes, and the pain was felt by families across the board -- young and old, well-educated and less so, with children or not. But the biggest impact was felt by young middle-age families, those headed by people ages 35 to 44. For this group, the median net worth -- total assets minus debts -- fell a whopping 54% in the three-year period to $42,100 in 2010. Such was their financial hardships that only 47.6% of these families said they had saved money in 2010; that was the lowest among all age groups, where an overall average of 52% of families saved some money that year. .... www.latimes.com/business/la-fi-mo-economy-wealth-20120611,0,5418853.story
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Post by spudbuddy on Jun 19, 2012 9:23:09 GMT -6
Great Recession erased nearly 40% of family wealth Los Angeles Times Washington— The Great Recession took such a heavy toll on the economy that the typical American family lost nearly 40% of its wealth from 2007 to 2010, shaving the median net worth to a level not seen since the early 1990s. "... The fall came with the collapse in the housing market and massive layoffs that slashed people’s incomes, and the pain was felt by families across the board -- young and old, well-educated and less so, with children or not. But the biggest impact was felt by young middle-age families, those headed by people ages 35 to 44. For this group, the median net worth -- total assets minus debts -- fell a whopping 54% in the three-year period to $42,100 in 2010. Such was their financial hardships that only 47.6% of these families said they had saved money in 2010; that was the lowest among all age groups, where an overall average of 52% of families saved some money that year. .... www.latimes.com/business/la-fi-mo-economy-wealth-20120611,0,5418853.story If the middle class is shrinking, what's rushing into the vacuum to replace it? A working class. Middle class is what used to be gainfully employed (and reliably employed) enough to accept risk - on consumption of big ticket items, higher-end services, and of course, real estate. I recall when a real and true definition of working class was the absence of credit.....which meant that any major purchase had to be saved up for. Things took a long time to be acquired, if at all. If middle class has operated on leverage for the past 3 decades - and leverage increasingly doesn't work for growing numbers of people (for lack of reliable employment at workable levels of return) then more people will operate the way the working class always traditionally has... What else is our recession other than a massive wealth transfer? The interesting thing is that even a lot of rather well-off people have lost a lot of wealth - yet still the system has to be protected. I'm always fascinated by the stories now, of struggling upper income earners....those in the top 20%. Seems a family with two six-figure incomes are more at risk - unable to afford what their incomes are "supposed" to provide. (gated communities, debt-free college graduated kids, proper health benefits, adequate retirements, private services...) I think what they really can't afford anymore is to imitate their betters. Is this a class clash? No doubt. We were led to trust the de-industrialization and financialization of our economy. Yet services reflect a rather small portion of world trade. The lion's share is still represented by moving "stuff" around the planet. Any grade school kid who's pretty sharp at math could figure this out. Yet the "trust us" mantra has lingered. We didn't necesarily trust at all, but we accepted (the inevitable?) What could we expect when investment doesn't create jobs (as a byproduct of creating wealth) - but that instead, wealth is just intercepted at upper levels before it ever creates such a thing as a good reliable job, at all. When High Finance is peopled with grads from elite colleges (and fierce competition resides there, too) then are not these drawn battle lines rather obvious? Our classnessness (much hailed 40-50 years ago) has taken a great shift. In the 1950's, a star baseball player was economically the equivalent of a very successful small middling businessman. Today, he surpasses the equivalent of a Humphrey Bogart. Don't Bogart this joint, my friend.....pass in on down the line. (a little bit.)
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Post by jeffolie on Jun 19, 2012 10:48:53 GMT -6
Expanding into the vacuum of a crushed middle class, not the working class in America.
Yes, the more are working; no, they are not working in America. Yes, they are working to make things in factories in Mexico, India, Brazil, eastern European countries with Foxconn industrial complexes, and of course China.
America's working class continues to shrink. What is the proof? The 'Labor Participation Rate' published every quarter continues to decline as working class people give up hope, drop into the charity of relatives and government funding such as disability(SSI), general relief on the county level, food stamps (new records every quarter for 2 years)...you get the picture of a shrinking American working class.
Massive weath transfers: to seniors. Overwhelming the federal budget plus future obligations from senior program continues with doomsday books, magazine articles, internet pieces, etc ... because the SS and medicare/medicaid portions of the federal budget get about 50% of all money spent...not defense, not subsidity for farmers, not education, not pork barrel earmarks to politicans.
Where does the money come from? Not income tax, not inheritance taxes, not capital gains taxes because all these combined total merely about 17% of the total outgoing dollars from the federal budget. Debt from the sale of Treasuries, etc also equals in the same ball park as taxes. The deficit about equals the taxes collected. Strange picture that mystifies the uniformed citizens.
Money, things do not buy happiness...values matter.
Proof: religion is popular. Overwhelmingly Americans believe. While the mixture of beliefs, religions, organized 'Religions' has change in our country's 200+ years, Americans continue to believe. Values have changed but values often determine our decisions more than money, things and materialism. Often now a Billionaire fails to be elected when throwing lots of their money into campaigning. Voters tend to ignore most campaign advertisements...unless it gets their attention by striking a nerve about a hot button issue most likely focusing on Values...voters get bored to death with charts about money and debts...unless one appeals to saving their children or grandchildren from financial ruin...an appeal to protecting family, a values issue.
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