The Federal Reserve is out with new data on consumer finances, and as one might expect, the news is not good. While the data was collected before the financial crisis of late 2008, the economists are able to draw some conclusions about how consumers have likely been affected. Among the report's highlights:
- Mean family income rose 8.5 percent between 2004 and 2007, while median income barely budged. That difference is largely explained by income distribution: Because wealthier families experienced some of the greatest income increases, the mean skews upwards.
- A 44 percent drop in average net worth for people in the lowest-quartile of net worth offers another sign of growing inequality in the distribution of wealth.
- Families headed by self-employed individuals emerged as winners: They reported the highest incomes.
- Around 57 percent of families reported saving money during the previous year, a figure that has remained relatively stable over the last 10 years.
- As for why people save, the two most popular reasons, each given by about one-third of respondents, were retirement and liquidity.
- Bad news for young people: Those younger than 35 experienced a 24 percent decline in their median net worth. (Those 75 and older, on the other hand, increased their net worth by about 19.2 percent.)
- Fewer than two in ten families own publicly-traded stocks, and those who do invest are more likely to be from high-income and high-wealth families.
- About seven in ten families own their own homes. (Again, these numbers pre-date the foreclosure crisis.)
- The economists estimate that declining home prices after the survey was completed decreased average net worth by about 23 percent since 2007. They estimate the median value of equity investment declines is around 36 percent, from $35,000 in 2007 to $22,500.