Great Recession erased nearly 40% of family wealth
The Great Recession took such a heavy toll on the economy that the typical American family lost nearly 40% of its wealth from 2007 to 2010, shaving the median net worth to a level not seen since the early 1990s.
The Federal Reserve said in a new report Monday that median family net worth, the point smack in the middle of those richer and poorer, fell to $77,300 in 2010 from $126,400 three years earlier after adjusting for inflation.
The fall came with the collapse in the housing market and massive layoffs that slashed people’s incomes, and the pain was felt by families across the board -- young and old, well-educated and less so, with children or not.
But the biggest impact was felt by young middle-age families, those headed by people ages 35 to 44. For this group, the median net worth -- total assets minus debts -- fell a whopping 54% in the three-year period to $42,100 in 2010. Such was their financial hardships that only 47.6% of these families said they had saved money in 2010; that was the lowest among all age groups, where an overall average of 52% of families saved some money that year.
More recent quarterly data from the Fed shows Americans’ net worth has increased since 2010 as the stock market has rebounded, more people have found work and housing prices have stabilized in many parts of the country. In the first quarter of this year, net worth saw its biggest gain in seven years.
Nonetheless, the typical American family’s wealth remains well below its pre-recession high, which is starkly detailed in Monday’s new report from the Fed’s triennial Survey of Consumer Finances.
For all families, the median income fell to $45,800 in 2010 from $49,600 in 2007 and $49,800 in 2004, after adjusting for inflation.
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