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Americans saw wealth plummet 40% from 2007 to 2010, Federal Reserve says

Ockham

Ockham

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Washington Post said:
[h=3]By Ylan Q. Mui, Published: June 11 The Washington Post[/h]
The recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with *middle-class families bearing the brunt of the decline.
The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.


The data represent one of the most detailed looks at how the economic downturn altered the landscape of family finance. Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Homeownership, once heralded as a pathway to wealth, became an albatross.
The findings underscore the depth of the wounds of the financial crisis and how far many families remain from healing. If the recession set Americans back 20 years, economists say, the road forward is sure to be a long one. And so far, the country has seen only a halting recovery.
“It’s hard to overstate how serious the collapse in the economy was,” said Mark Zandi, chief economist for Moody’s Analytics. “We were in free fall.”
The recession caused the greatest upheaval among the middle class. Only roughly half of middle*-class Americans remained on the same economic rung during the downturn, the Fed found. Their median net worth — the value of assets such as homes, automobiles and stocks minus any debt — suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose slightly.
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http://www.washingtonpost.com/busin...d-40-percent/2012/06/11/gJQAlIsCVV_story.html

So what are the issues here - certainly the recession is part of this. I think that people realized that they had to pay down some of their debt so some of their wealth went into that. The next issue is the REAL unemployment numbers which is around 14% because some have dropped out of the job market and no longer collect unemployment. Next is the housing down turn - wealth inevitably also includes assets... and since the housing market down turn and foreclosures have over the past 4 years been very high, that wealth also takes a hit there. We needed a leader to address jobs and the economy in 2008; we didn't get that. Damn you hindsight for being 20/20.
 
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Correction: we needed a leader from 2000 - 2008.
 
QE1 and QE2 certainly played their part as well as a stock market that has under performed and pension plans that have just disappeared. But, it is a recession, that's what happens in a recession.
 
AdamT said:
Correction: we needed a leader from 2000 - 2008.
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How much did American's wealth plummet from 2000-2008?

We still need a leader - unlike the failure we have now.
 
Ockham said:
How much did American's wealth plummet from 2000-2008?

We still need a leader - unlike the failure we have now.
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He's not a failure, he's a follower. He's following Greece and Spain into the depths of government failure...ok so he's both a failure and a follower.
 
Ockham said:
How much did American's wealth plummet from 2000-2008?

We still need a leader - unlike the failure we have now.
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The vast majority of the damage was done from '07 through the first few months of '09.
 
I would suspect that the majority, if not all, of the lost wealth from 07-10 is from 401ks and home values.
 
Samhain said:
I would suspect that the majority, if not all, of the lost wealth from 07-10 is from 401ks and home values.
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The crazy housing bubble caused an enormous amount of damage. 30 years ago my parents bought the home I grew up in for 15k. 10 years ago, that home was valued at almost 120k. That is an 800% return in only 20 years. Anyone who does not think this is likely over-valuation has a seriously warped idea of value. Any time you have this kind of inflated values, it is going to be ugly when it readjusts. The whole boom and bust thing, however, is a natural cycle in the market. The less control and regulation, the greater the swings. Certainly it is a shame that so many Americans ended up underwater because of this particular bust, but it is far from the first time. The biggest problem with this particular bust cycle, is that it hit home values extra hard, and that is where so many middle income Americans have a good portion of their wealth. The home I grew up in, btw, is now valued at approx 75k. Definitely a bad drop from its high of 120k, but still not a bad return on the original 15k.
 
AdamT said:
The vast majority of the damage was done from '07 through the first few months of '09.
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And your evidence to support your opinion?
 
FRB: Survey of Consumer Finances

The report referenced for the OP article is only available every ~3 years. 2001->04 was 6% gain 04->07 was 17% gain.

Internals for the latest report, 07->10, wont be available for general consumption until late June.
 
Samhain said:
I would suspect that the majority, if not all, of the lost wealth from 07-10 is from 401ks and home values.
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It had nothing to do with any policies Bush put in place, but what do you expect from Adam.
 
Grim17 said:
It had nothing to do with any policies Bush put in place, but what do you expect from Adam.
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Yeah, Bush was just president for six years leading up to the collapse, and for the worst part of the collapse. Why would anyone blame him? :lol:
 
Ockham said:
And your evidence to support your opinion?
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s%26p500.JPG


us-home-prices.jpg
 
AdamT said:
The vast majority of the damage was done from '07 through the first few months of '09.
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i would disagree at least in part. the '08 correction was due to the failure of the multi-decade job exportation model and wage stagnation. income was replaced with credit during this time so that on the surface, the economy appeared to be doing ok because people were still spending. eventually, that caught up with us, and when the credit ran out, it was game over.

the fact remains that we live in a consumer-spending based economy. if we don't hire people to make things and deliver services, the economy won't recover in a sustainable way. additionally, income tax revenue will continue to be insufficient, and the tax structure and monetary system risk an even larger collapse if we don't learn the credit lesson and rectify it with increased revenue and reduced borrowing.
 
Helix said:
i would disagree at least in part. the '08 correction was due to the failure of the multi-decade job exportation model and wage stagnation. income was replaced with credit during this time so that on the surface, the economy appeared to be doing ok because people were still spending. eventually, that caught up with us, and when the credit ran out, it was game over.

the fact remains that we live in a consumer-spending based economy. if we don't hire people to make things and deliver services, the economy won't recover in a sustainable way. additionally, income tax revenue will continue to be insufficient, and the tax structure and monetary system risk an even larger collapse if we don't learn the credit lesson and rectify it with increased revenue and reduced borrowing.
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I agree that the precursors go much farther back. I'm just talking about when the losses actually accrued.
 
Grim17 said:
It had nothing to do with any policies Bush put in place
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Eight years after arriving in Washington vowing to spread the dream of home ownership, Bush is leaving office, as he himself said recently, "faced with the prospect of a global meltdown" with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how the United States got here is partly one of Bush's own making...

As early as 2006, top advisers to Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Bush and his team misdiagnosed the reasons and scope of the downturn. As recently as February, for example, Bush was still calling it a "rough patch."

http://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.html?pagewanted=all

...and if anyone wants to reject the conclusions because of the source, Google "Bush" and "homeownership" and choose any of thousands of sources on information on how Bush pushed the housing bubble.
 
AdamT said:
I agree that the precursors go much farther back. I'm just talking about when the losses actually accrued.
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Funny you never mention that Bush had to live with the mess of the tech bubble created under Clinton.
 
washunut said:
Funny you never mention that Bush had to live with the mess of the tech bubble created under Clinton.
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Actually I've mentioned it many times. Just as I've mentioned that Clinton deserves a good share of the blame -- along with many other people in and out of government.
 
AdamT said:
s%26p500.JPG


us-home-prices.jpg
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It's something - not much of something but something. Not sure what the data points are in the home prices chart... and not everyone is in the S&P market.

So given this evidence... why wouldn't our President address it? He campaigned on it for 2 years prior to 2008's election.
 
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Partisan hackery is so eloquent.

America has been hurting since 9/11.
 
AdamT said:
s%26p500.JPG


us-home-prices.jpg
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Put up some non-US dollar based items, perhaps like the price of gasoline, silver or gold, that have REAL global values. Using totally internal dollar based "index" values can show pretty much anything you wish them to, since inflation is then "invisable".
 
ttwtt78640 said:
Put up some non-US dollar based items, perhaps like the price of gasoline, silver or gold, that have REAL global values. Using totally internal dollar based "index" values can show pretty much anything you wish them to, since inflation is then "invisable".
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Err, I guess that would make sense if I was talking about the economy in Suriname, but I'm talking about the US economy. And of course inflation has been at very low levels for quite some time.
 
AdamT said:
Correction: we needed a leader from 2000 - 2008.
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It's Bush's fault, its Bush's fault! Wahahaha.

Sent from my blasted phone.
 
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