Feeling poorer these days? You’re not alone

by Ryan Streeter on June 12, 2012. Follow Ryan on Twitter.

The Fed study yesterday on vanishing household wealth in America provides a sobering picture of the economic landscape for most families.

This NYT article on the study includes these worrying facts and figures:

  • A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss.
  • Median family income fell to $45,800 in 2010 from $49,600 in 2007.
  • The share of families saving anything over the previous year fell to 52 percent in 2010 from 56.4 percent in 2007.
  • The share of households reporting any debt declined by 2.1 percentage points over the last three years, but 74.9 percent of households still owed something, and the median amount did not change.
  • Families with credit card debt declined by 6.7 percentage points to 39.4 percent, and the median balance fell 16.1 percent to $2,600, but families with education-related debt rose to 19.2 percent in 2010 from 15.2 percent in 2007.
  • The Fed noted that education loans made up a larger share of the average family’s obligations than loans to buy automobiles for the first time in the history of the survey.
  • One basic reason for this disproportion is that the wealth of the middle class is mostly in housing, and the median amount of home equity dropped to $75,000 in 2010 from $110,000 in 2007.
  • http://twitter.com/getsocialpr Rodger

    I think the point about educations loans is due in part to the exploding costs of education that are related to the governments short-changing public education, on the one hand. And, it’s university and colleges that bass the buck on to the public, instead of eliminating under-performing programs, and investing in technology. Additionally, smart people like me are having a hard time finding well-paying jobs, which has brought out the capitalist bulldog in me. I don’t spend, I pay my bills, I make an extra buck anyway I can — that’e legal, of course.

    To solve the problem, student loans must be capped. Interest rate must best below 1%. Funding to colleges and universities should be increased by private donations and by the government increase in funding. Private donates could increase by taxing the wealthy at a higher rate, there by forcing them to invest their money to lower their tax obligation.

    Finally, college administrators must be held accountable for their spending. And companies should be persuaded to pay higher wages though increased taxation.