Even as the United States fights it way back from recession, the middle class is still feeling the hit. A federal survey shows that the median family net worth plummeted 40 percent from $126,400 in 2007 to $77,300 in 2010. The Fed releases its Survey of Consumer Finances every three years.
Families between the 60th and 80th percentile of income saw a 40.4 percent drop in net worth from $215,700 to $128,600 in the three-year span, the largest of any group. Those between the 20th and 39.9th percentile fell from $39,600 to $25,600 in median net worth, a 35.4 percent drop. Central to the drop in net worth values has been the decline of the housing market. Falling real estate values have lead to overall lower net worth as homes lose their value. The survey characterized the period as the most serious recession since the Great Depression:
“Families’ finances are affected by both their own decisions and the state of the broader economy. Over the 2007–10 period, the U.S. economy experienced its most substantial downturn since the Great Depression. Real gross domestic product (GDP) fell nearly 5.1 percent between the third quarter of 2007 and the second quarter of 2009, the official period of recession as determined by the National Bureau of Economic Research. During the same period, the unemployment rate rose from 5.0 percent to 9.5 percent, the highest level since 1983. Recovery from the so-called Great Recession has also been particularly slow; real GDP did not return to pre-recession levels until the third quarter of 2011. The unemployment rate continued to rise through the third quarter of 2009 and remained over 9.4 percent during 2010. The rate of inflation, as measured by the consumer price index for all urban consumers (CPI-U-RS), decreased somewhat over the period from an annual average of 2.8 percent in 2007 to 1.6 percent in 2010.”
American families have used the three-year period to pay down debts owed. The number of families with any kind of debt decreased by 2.1 percent to 74.9, the first time the figure had decreased since 2001.
