The typical American family lost nearly 40% of its wealth from 2007 to 2010 as the Great Recession reduced household net worth to a level not seen since the early 1990s.
The net worth of the median U.S. family — one with an equal number of families richer and poorer — fell to $77,300 in 2010 from $126,400 three years earlier, after adjusting for inflation, the Federal Reserve said in a new report Monday.
The drop, much steeper than previous Fed quarterly reports have suggested, underscores the severity of the 2007-09 recession that decimated the housing market and resulted in massive layoffs that slashed people's incomes.
Although families have recovered some of the lost wealth in the last 18 months, the new 80-page Fed report shows that the financial shock hit them across the board — rich and poor, young and old, the well-educated and the less educated and those with and without children. The report also detailed incomes, debts and various assets owned by families.
The report comes at a time of growing concern about the U.S. economy as sputtering job growth has added to worries of a global slowdown, with Europe on the ropes and both China and India losing steam.
For President Obama, whose reelection could hinge on voters' assessment of their financial condition and changes, the new Fed data supports his frequent statement of the terrible economic situation that he inherited when he took office in early 2009. At the same time, the slow and halting recovery since mid-2009, when the recession officially ended, has left the president vulnerable.
The report showed that the biggest reduction in net worth, in percentage terms, affected young middle-age families, those headed by 35- to 44-year-olds. Their median net worth — total assets minus debts — dropped 54% to $42,100 over the period.
Read more at the LATimes....