December 1, 2017 – Not feeling the recovery? You’re not alone
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 percent since 1998. (The survey’s definition of families includes single people and childless couples and is equivalent to how other government surveys define households.) In addition:
—The lowest income families — the bottom fifth — saw their net worth fall 22 percent.
—Hardest hit is the working class, the second-lowest income tier, whose net worth declined 34 percent.
—Families in the middle, with incomes from $43,501 to $69,500, treaded water, up just 3.5 percent.
—For the top 10 percent, net worth rose 146 percent since 1998. In 2013, the last time the survey was done, net worth for the top 10 percent had risen about 75 percent since 1998.
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.
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.