Net worth declines 1/3rd for typical American household

[IGotWorms 4,063]

http://www.nytimes.com

 

Economic inequality in the United States has been receiving a lot of attention. But its not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

 

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

 

The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 94 percent of the population had less wealth and 4 percent had more.) It found that for this well-to-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.

 

For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

[Magnificent Bastard 192]

You mean trickle down doesn't work? Keep it up Wall Street, Banks and every other non productive member of our current economic system that continue to take and take. Some day the people of this country are going to wake up and realize it's not the poor that have been ripping them off the most.

[SUXBNME 1,611]

You mean trickle down doesn't work? Keep it up Wall Street, Banks and every other non productive member of our current economic system that continue to take and take. Some day the people of this country are going to wake up and realize it's not the poor that have been ripping them off the most.

[Voltaire 5,506]

That's quite a drop.

 

Ah, but where are my manners? On behalf of all the other perma-poor Americans, I'd like to welcome any newcomers who've joined us in the last few years. As it is though, I'm not around to greet you in person.

[BunnysBastatrds 2,676]

Worst year for me and my wife since we've been married.

[MDC 8,011]

Reagan!

[drobeski 3,061]

There's your change right there, hoping the hope shows up at some point

[IGotWorms 4,063]

I hope the 2016 candidates on both sides try to offer some REAL solutions. No talking about how they were poor once too, no ideological platitudes...real actual plans to combat the problem.

[rholio 340]

I hope the 2016 candidates on both sides try to offer some REAL solutions. No talking about how they were poor once too, no ideological platitudes...real actual plans to combat the problem.

 

That doesn't get people elected... unfortunately.

[Frozenbeernuts 2,417]

Does it matter? What is anyone really going to do about it? I dont see anything significantly changing until there is a major collapse.

 

Doesnt the bubble burst at some point? Can everything keep inflating without one end of the equation disproportionately larger than the other? It just seems that one day the market is going to see the truth and bottom out. Credit inflating prices to unreasonable heights.

 

Price goes up i need to make more. I am making more so they have to raise prices. They raised prices so i have to make more. A select few get richer than a few countries and have enough in the bank to survive 1000 generations without working ever again.

 

And im not just talking about the typical rich. I am talking about the uber rich and the banks. Why does a 4% interest rate on my mortgage still let the bank charge double what i payed for a house?

 

Doesnt seem like this can go on forever.

[peenie 1,999]

this has been a good year for me.

[BunnysBastatrds 2,676]

this has been a good year for me.

Congrats. Me and the wifey will be changing jobs in the next twelve months. I know more people than not who are having a really hard time right now.

 

Our stocks are fine. Our income is not. Sad times.

[NorthernVike 2,100]

I would personally like to thank president obama. My net worth has never been higher.

[MedStudent 56]

A big part of the net worth going down was due to the housing crash. It was really a fake net worth as the housing prices were driven to an unrealistic price.

[DankNuggs 305]

Yep

[IGotWorms 4,063]

A big part of the net worth going down was due to the housing crash. It was really a fake net worth as the housing prices were driven to an unrealistic price.

While true, I think this is the wrong way of looking at it.

 

The housing bubble created illusory wealth, yes. But all that really did was make the average family think they were maintaining their position re: net wealth, when in fact it was slipping and has been for decades.

[Mungwater 601]

While true, I think this is the wrong way of looking at it.

 

The housing bubble created illusory wealth, yes. But all that really did was make the average family think they were maintaining their position re: net wealth, when in fact it was slipping and has been for decades.

But the average family is dumb

[jerryskids 7,162]

And im not just talking about the typical rich. I am talking about the uber rich and the banks. Why does a 4% interest rate on my mortgage still let the bank charge double what i payed for a house?

 

Are you talking over the duration of the loan? If so, methinks you don't understand how compound interest works.

[Patriotsfatboy1 1,433]

I think that there is a factor that is not income related - savings. A good saver has seen their net worth increase over the last ten years.

 

People extending too far and buying more house than they need took a big hit. People buying too much on credit see net worth drop.

 

One of the other reasons that there is a gap is because richer people save better and are more diversified. People like to focus on income, but there is a spending component too.

[Frozenbeernuts 2,417]

Are you talking over the duration of the loan? If so, methinks you don't understand how compound interest works.

Ok double is an exaggeration at 4%. My original 7.25% interest was more than double my mortgage though.

[Magnificent Bastard 192]

So if the Federal Reserve prints money on behalf of the U. S government, lends it to the banks, who then lend it to me for my mortgage, why again do we need the Fed and the banks? I thought the efficiencies of capitalism woukd get rid of all those middle men. I'd rather just borrow it direct and split the difference.

[DankNuggs 305]

Are you talking over the duration of the loan? If so, methinks you don't understand how compound interest works.

Doesn't understand amortization, but yes. In rough terms:

 

4% per year times 30 years of a typical mortgage = 120% of the loan over the life of the loan

[DankNuggs 305]

I think that there is a factor that is not income related - savings. A good saver has seen their net worth increase over the last ten years.

 

People extending too far and buying more house than they need took a big hit. People buying too much on credit see net worth drop.

 

One of the other reasons that there is a gap is because richer people save better and are more diversified. People like to focus on income, but there is a spending component too.

Using leverage amplifies gains and losses

[redtodd 7]

I'm assuming there are multiple factors that result in this:

 

1) Home values were inflated in 2004, thus the value for wealth would have been inflated then as well.

2) Too many people took money out of the market when it went bad and moved it to cash. Interest rates for savings are almost non-existent, so they not only lost money during the down turn, they did not realize the gains of the inevitable rebound in the market.

3) People are saving less overall. They are spending more than they need to. This isn't because they have to, it is because they want better car, the newest technology, the vacation. Americans are becoming more stupid with money.

[edjr 6,988]

There's your change right there, hoping the hope shows up at some point

 

That's all I have left. Spare change

[edjr 6,988]

I'm assuming there are multiple factors that result in this:

 

1) Home values were inflated in 2004, thus the value for wealth would have been inflated then as well.

2) Too many people took money out of the market when it went bad and moved it to cash. Interest rates for savings are almost non-existent, so they not only lost money during the down turn, they did not realize the gains of the inevitable rebound in the market.

3) People are saving less overall. They are spending more than they need to. This isn't because they have to, it is because they want better car, the newest technology, the vacation. Americans are becoming more stupid with money.

 

The housing market is going to crash again, hard. it won't be long

[IGotWorms 4,063]

I'm assuming there are multiple factors that result in this:

 

1) Home values were inflated in 2004, thus the value for wealth would have been inflated then as well.

2) Too many people took money out of the market when it went bad and moved it to cash. Interest rates for savings are almost non-existent, so they not only lost money during the down turn, they did not realize the gains of the inevitable rebound in the market.

3) People are saving less overall. They are spending more than they need to. This isn't because they have to, it is because they want better car, the newest technology, the vacation. Americans are becoming more stupid with money.

True, but you left out a lot of external factors that are squeezing the middle class: stagnating wages and a shift of tax burdens, to start with

[TimmySmith 2,783]

Where do I sign to get my 56K?

[edjr 6,988]

Where do I sign to get my 56K?

 

Remember when Bush gave everyone $400?

[hoytdwow 202]

 

Remember when Bush gave everyone $400?

 

Sorry about those 2 wars, here's a couple hundy

[BudBro 185]

You mean trickle down doesn't work? Keep it up Wall Street, Banks and every other non productive member of our current economic system that continue to take and take. Some day the people of this country are going to wake up and realize it's not the poor that have been ripping them off the most.

trickle down works fine when there is an efficient marketplace. when the wealthy invested in the 80s, they invested in companies that developed and manufactured products that made profit, and invested that profit into production and employees. this market is not that. trulia has no income as a company and was just purchased, or an offer made at least, by zillow for 3.5b. no jobs will be produced by that. in fact, they will likely merge and fewer jobs will result. candy crush was just ipo'd. they produce nothing. caterpillar produces stuff, but since there is less building, there are less orders for big equipment...or companies put off purchasing new equipment until things pick up, so the old equipment is kept in use longer. no orders, no need for new employees...or worse, layoffs or part time for the current employees.

 

with the qe programs, banks just trade bonds with the fed. they won't and can't make commercial loans. no loans, no capital for growth. no growth in sales, no growth in employment, no wage increases. the market is up on fiat purchases, while companies like apple sell 5 gajillion iphones for a $30 product produced overseas or by employees here on visa.

 

if there isn't profit in a company, they have no need for you. it's a sobering thought for some, but when the state finally takes over everything, there won't be any $ made by the serfs to pay taxes, which runs the state, which means the state has no ability to care for you...which means you starve to death. the turd world looks like that for a reason...because it doesn't work. neither does the model of keynes, which is what you are seeing today. this economy is built upon govt investment to make up for a regulatory environment that discourages corporate profit. the result is a 35% decrease in wages, plus a 20% increase in inflation (the cost of things like food and gasoline). we lived off trickle down for 20 years. it made bill clinton look a genius, which ought to tell you something. we should give it another shot. this plan isn't working.

[Magnificent Bastard 192]

All that ^ above is bull-spit. Trickle down doesn't work. Manufacturing left the U. S. For cheap(slave) labor and no regulations overseas. We still buy plenty of stuff. We just don't make it anymore.

[OldMaid 2,137]

trickle down works fine when there is an efficient marketplace. when the wealthy invested in the 80s, they invested in companies that developed and manufactured products that made profit, and invested that profit into production and employees. this market is not that. trulia has no income as a company and was just purchased, or an offer made at least, by zillow for 3.5b. no jobs will be produced by that. in fact, they will likely merge and fewer jobs will result. candy crush was just ipo'd. they produce nothing. caterpillar produces stuff, but since there is less building, there are less orders for big equipment...or companies put off purchasing new equipment until things pick up, so the old equipment is kept in use longer. no orders, no need for new employees...or worse, layoffs or part time for the current employees.

 

with the qe programs, banks just trade bonds with the fed. they won't and can't make commercial loans. no loans, no capital for growth. no growth in sales, no growth in employment, no wage increases. the market is up on fiat purchases, while companies like apple sell 5 gajillion iphones for a $30 product produced overseas or by employees here on visa.

 

if there isn't profit in a company, they have no need for you. it's a sobering thought for some, but when the state finally takes over everything, there won't be any $ made by the serfs to pay taxes, which runs the state, which means the state has no ability to care for you...which means you starve to death. the turd world looks like that for a reason...because it doesn't work. neither does the model of keynes, which is what you are seeing today. this economy is built upon govt investment to make up for a regulatory environment that discourages corporate profit. the result is a 35% decrease in wages, plus a 20% increase in inflation (the cost of things like food and gasoline). we lived off trickle down for 20 years. it made bill clinton look a genius, which ought to tell you something. we should give it another shot. this plan isn't working.

Trickle down does not work fine... Well... actually, it's never been fully implemented, so maybe we'll never know.

 

David Stockton, who just happened to be Reagan's economic guru, and behind most of Reagan's economic policies, came out publicly and denounced it. There's a reason that is was being sold to the American people as "Supply Side Economics" and not Trickle Down. It had been tried before in the late 1800's under the name of Horse and Sparrow.

 

http://politicalgates.blogspot.com/2011/12/fallacy-of-reaganomics-23.html

http://politicalgates.blogspot.com/2011/12/fallacy-of-reaganomics-23.html

http://en.m.wikipedia.org/wiki/Trickle-down_economics

[BunnysBastatrds 2,676]

I'm worse off now than at any point in my life. The have nots are doing better than me. Fact! I was way better under Bush than this fucktaed now.

[MDC 8,011]

I'm worse off now than at any point in my life. The have nots are doing better than me. Fact! I was way better under Bush than this fucktaed now.

I'm doing a whole lot better. Maybe you need to try harder and bootstrap yourself up?

[BunnysBastatrds 2,676]

I'm doing a whole lot better. Maybe you need to try harder and bootstrap yourself up?

My dad's and my business is closing its doors after thirty years. Never in a million years did we see that coming.

 

My wifey is about to quit her high end retail job because sales are so bad. Money is tight. Those with money are reluctant to spend like they used too. It trickles down.

 

But who cares. I've made hard choices and cut spending. Fawk you!!!!!

[Kanil 521]

I've was lucky enough to have gotten a fairly substantial promotion (50% raise) about 20 months ago. This has really allowed us to not see much of this but I have definitely seen it in the quality of people available to hire. There are many people that I would have considered overqualified for the job 4 years ago that are having to take the step down because they're desperate.

[Mungwater 601]

My dad's and my business is closing its doors after thirty years. Never in a million years did we see that coming.

 

My wifey is about to quit her high end retail job because sales are so bad. Money is tight. Those with money are reluctant to spend like they used too. It trickles down.

 

But who cares. I've made hard choices and cut spending. Fawk you!!!!!

Does your wife own the store? If not, seems foolish to quit.

[Frank M 181]

True, but you left out a lot of external factors that are squeezing the middle class: stagnating wages and a shift of tax burdens, to start with

 

I make a decent wage for someone in my field, I'm driving a ten year old car, I bought one TV in the last 20 years, my kids don't have the latest tech unless they buy it themselves, I only have a couple thousand in CC debt and I'm still barely making ends meet.

 

It's the new paradigm.

[MDC 8,011]

My dad's and my business is closing its doors after thirty years. Never in a million years did we see that coming.

 

My wifey is about to quit her high end retail job because sales are so bad. Money is tight. Those with money are reluctant to spend like they used too. It trickles down.

 

But who cares. I've made hard choices and cut spending. Fawk you!!!!!

What's high end retail for Louisiana? Sam's Club?