Dude, Where's My Net Worth?

U

UT1986

500+ Posts
Who Destroyed the Middle Class?

"The Federal Reserve released its Survey of Consumer Finances last week. It’s a fact filled 80 page report they issue every three years to provide a financial snapshot of American households. As you can see from the chart above, the impact of the worldwide financial collapse has been catastrophic to most of the households in the U.S. A 39% decline in median net worth over a three year time frame is almost incomprehensible. Even worse, the decline has surely continued for the average American household through 2012 as home prices have continued to fall. Median family income plunged by 7.7% over a three year time frame and has not recovered since the collection of this data 18 months ago. Even more shocking is the fact that median household income was $48,900 in 2001. Families are making 6.3% less today than they were a decade ago. These figures are adjusted for inflation using the BLS massaged CPI figures. Anyone not under the influence of psychotic drugs or engaged as a paid shill for the financial oligarchy knows that inflation is purposely under reported in order to keep the masses sedated and pacified. The real decline in median household income is in excess of 20% since 2001."
The Link
 
The increase in net worth due to the housing price bubble was fictitious so the decline is getting back to reality, IMHO. I bought my house in 2006, it increased ~$250k in the subsequent 2 years and is now back to what I paid for it.

American's were on an unsustainable consumption binge leveraging their houses as credit cards based on the myth that housing prices never fall.

The benefit of this economic downturn is that American's have again become better savers. Sadly the jobless have been significantly impacted.
 
The point of the article is that it has been a bi-partisan screw job. The current system under both parties has led us to dead ends in economic prosperity for the middle class. I don't care if it's Bush or Obama or Clinton or Reagan, the middle class is getting screwed.

But I don't know which is worse, BHO blaming Bush for everything or Repubs bitching about BHO blaming everything on Bush.
 
I agree that the middle class is getting screwed. The poverty class though growing is being propped up by our social net. The upper class continues to vastly outpace everyone else. The system is rigged.
 
Seattle Husker you are correct about the housing bubble and how that has affected net worth with real estate prices declining, but that doesn't explain the median income declining over the last 10 years. Wages have been stagnant. Removing real estate from the picture, inflation is also playing a part in destroying net worth of middle class retirement portfolios across the country through mindless printing of money through Fed Reserve policies.
 
Good point. Furthermore, over-regulation is killing small business start-ups which further concentrates wealth. Liberals fail to understand that big business do not mind most regulations. They have the resources to comply and it helps reduce competition from small business.
 
Not going to say everything is fine at all, it isnt. But the stats above can actually be explained pretty easily and they arent as dire assome would believe.

Regarding net worth, for the vast majority of Americans net worth is dominated by real estate and retirement accounts. When this survey was completed, 18 months ago, the real estate market and stock market were in horrible shape. Not saying they deliberately picked the dates, at all, but the date they picked just happened to be just about the low point for both over the past 5 years. Assuming most people dont sell their house or cash in their retirement accounts, these assets will likely recover their value over time.

Regarding household income, it is a bit of a statistical trick. There was large scale fresh unemployment at the time of this report. There was also a very high/over needed immigrant population. So you had middle class wage earners that went from $40K-$5oK drop to $0 at the same time that their was an influx of low wage immigrant work. Construction probably got hit the worst. Those factors caused the median point to get pushed down. Of course this doesnt mean it is good, at all. But as the economy rebounds and employment picks up, the median wage will rise as folks go from $0 to something.
 
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