Family Net Worth Drops to 90s Levels, Fed Says
The Great Recession shrank Americans wealth so much that in 2010 median family net worth was not more than it had been in 1992 after adjusting for inflation. That’s according to a survey by the Federal Reserve which found that median net worth declined from $126,400 in 2007 to $77,300 in 2010. The recession officially began in December 2007 and ended in June 2009.
“A large portion of it is really a decline from the peaks in terms of housing values,” said James Hughes, Dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers. “We had two bubbles, one in the mid 1990s and one in 2000 and that gave us an exaggerated sense of our own personal wealth. In the intervening years since the recession, much of that home equity has been wiped out, bringing us to 1990s levels.”
“A second factor is a decline in the stock market. We’re roughly where we were in the year 2000 in terms of stock market levels. So, add those two factors together along with an abysmal savings rate during that period and there are households having a major setback,” said Hughes.
The median marks the point where half had more and half had less. Net worth is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.