Liz Weston: Not feeling the recovery? You're not alone
|Report an Error|
Share via Email
Incomes are up, the stock market is soaring, and home prices have largely recovered from the mortgage meltdown. But Americans still haven't regained all the wealth they lost and, on the whole, are worse off than in 1998.
The Federal Reserve's just-released Survey of Consumer Finances, done every three years, tells a stubbornly grim tale. Median net worth for all families, measured in 2016 dollars, dropped 8
—The lowest income families — the bottom fifth — saw their net worth fall 22
—Hardest hit is the working class, the second-lowest income tier, whose net worth declined 34
—Families in the middle, with incomes from $43,501 to $69,500, treaded water, up just 3.5
—For the top 10
Net worth is what people own — their houses, cars, retirement and savings accounts — minus what they owe in mortgages, student loans, credit cards and car loans. An analysis of the 2016 data shows that people in the lowest two income bands are getting squeezed from both ends.
AMERICANS OWN LESS AND OWE MORE
Median debt for all families increased by 25
The top 10
Homeownership dropped in all income categories but most steeply in the bottom three. The homeownership rate fell 11
WHY NET WORTH MATTERS
The decline in wealth actually started long before the recession, says sociologist Fabian Pfeffer, research assistant professor at the University of Michigan's Institute for Social Research. The housing bubble, which peaked in 2007, obscured the fact that many Americans had been losing ground since the 1980s, he says.
Economists can debate precisely why so many people have taken it in the teeth in recent decades, but it's clear that years of stagnant or dropping incomes have taken a toll on their ability to get ahead.
The Fed survey shows the median family income before taxes peaked in 2004; by 2013, it had fallen more than 12
Less income means less money to invest in homes, educations and retirement. Less investment leads to less wealth. Less wealth means being less able to help the next generation get started with educations and down payments. And so the gap widens.
If all boats were rising, tax cuts that benefit mostly the affluent wouldn't be a crisis. Under current circumstances, though, too many people are sinking or barely staying afloat. Lawmakers should focus their concern on those folks, not the ones in the yachts.
This column was provided to The Associated Press by the personal finance
Liz Weston is a columnist at NerdWallet, a certified financial planner and author of "Your Credit Score." Email: firstname.lastname@example.org . Twitter: @lizweston.
NerdWallet: Calculate and compare your net worth https://nerd.me/calculate-net-worth
You don't have to spend a fortune on health and beauty products. Here's how to save money.
If you're approached with a promise of “fabulous returns” or a “sure thing” that you suspect to be part of a pyramid scheme, here are some questions to ask.