According to the Fedís survey of consumer finances, released Thursday, average net worth is estimated to have fallen 22.7% from 2007 until October 2008. The median, or midpoint, fell a more modest 17.8%, suggesting declines were centered among wealthier families.
Easy come, easy go.
If the value of second homes and businesses are excluded, the Fed said in its report, average household net worth fell 12 percent, which reflects that such assets are "relatively concentrated among wealthier families."
We've given up all the gains of yet another bubble. I hope we can at least swim in place and not see even bigger declines than 2001 brought.
As of October, median net worth had fallen to $98,900, down 3.2% from the end of 2007 and 2% below the level reported in the 2001 survey that was conducted after the dot.com bubble burst. Since October, stock prices have fallen another 15%, while home prices have fallen at least 2%.
"Americans' personal net worth declined 11% Y/Y from the end of 3Q07 to the end of 3Q08... the largest (year-to-year) decline in 56 years for which the agency has data available."
But some of this net worth decline is not as bad as it looks. Housing price declines are cutting the prices on homes which otherwise are just as usable as when they cost more.
The median price of a U.S. home declined 12 percent to $180,100 from a year earlier and sales of properties with mortgages in default accounted for 45 percent of all transactions, the Chicago-based National Association of Realtors said today. Prices declined in almost nine out of every 10 cities.
For people who want to buy a home salaries aren't going up but then the prices of homes are going down. How this balances out varies from person to person.
About 33 percent of U.S. companies may freeze pay this year, an increase from 25 percent last year, according to a Jan. 22-29 survey of 400 mid-size and large companies released Feb. 9 by Mercer, a compensation consulting company in New York. The survey did not include questions about pay reductions.
Can we unravel the accumulated mountains of private sector debt without deep deflation?
|Share |||By Randall Parker at 2009 February 13 11:55 PM Economics Living Standards|