A tale of two economies: Your wealth vs. that of the 1% [Video]
OK, let’s check the scoreboard: Average family wealth has plunged about 40% thanks to the lousy economy. Meanwhile, luxury retailer Michael Kors says its profit has more than tripled.
And the round goes to the 1%.
The big drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- means the recession wiped away 18 years of savings and investment by families, according to the latest figures from the Federal Reserve
Much of the drop in wealth, to levels not seen since 1992, was attributable to a sharp decline in housing values, the Fed says. In 2007, the median homeowner had a net worth of $246,000. Three years later, that number was down to $174,500.
Families in the West and South were especially hard hit as the economic downturn chewed up housing prices.
Adding insult to injury: Income levels fell during the same period, with median pre-tax income falling 7.7%.
Tough times all around, right? Not so much. Profit at Michael Kors Holdings took off like a rocket in the fourth quarter.
The American fashion designer sells $2,295 python satchels and $1,295 calf-hair cowboy boots, but also creates somewhat more affordable $59 thong sandals as well as stylish iPhone carriers and MacBook sleeves.
Customers seem to like what they see. The company, which had its initial public offering last year, pocketed $43.6 million in quarterly profit. There are 301 Michael Kors stores worldwide, including boutiques in Beverly Hills, New York and Palm Beach.
So what have we learned today? Well, it’s pretty clear that ordinary families are feeling the pinch. But people who can throw more than $2,000 at a purse aren’t feeling particularly bruised at all.
Yep, the economy’s coming back. Just not for everyone.
