Those of us in the middle class know that the recent economic recession has been bad. We just didn't know how bad until this past Monday when the Federal Reserve revealed that the median net worth of families plunged 39 percent in just four years from $126,400 in 2007 to $77,300 in 2010. Flannista hasn't been paying much attention to politics or current events this year, but the dollar amounts and percentage decline caught her eye: they are almost precisely the amounts and percentage her income has plunged in just the past six months. Since 2005, my income has collapsed nearly 72 percent, and I haven't yet retired.
The data from the Federal Reserve also revealed how:
- The promise of retirement built on the inevitable rise of the stock market proved illusionary.
- Homeownership, once a pathway to wealth, became an albatross.
- The recession set back Americans 20 years to 1992.
Fewer families are carrying credit card balances, which is good news, but more families are taking out education loans. Nearly 11 percent said they were at least 60 days late in paying a bill, up from 7 percent in 2007. The median value of stock-market-based retirement accounts declined 7 percent, to $44,000. In six months in 2008, Flannista's retirement account lost half its value. It is only now back to where it was four years ago, this after Flann has invested an additional $100,000 from bank savings. The $36,100 she withdrew from savings in March to invest into her retirement account has been wiped out and then some with this year's feeble market.
The biggest factor for the economic collapse, however, is the median value of homes which fell by 42 percent between 2007 and 2010, to $55,000. Americans like the Sassistas! had hoped to rely on our housing for a larger part of our net worth. Now we're weary of spending much money on anything to shore up what we have left of our net worth.
By contrast, the wealthiest families' median net worth rose slightly.
Flann is hoping that the market will go back up, but that continues to seem illusionary. How long will it take to go back up? How long will it take for the value of our homes to go up? Will we ever be able to retire? Or will we continue to see those increasing number of media stories about the value of working until we die?