Monday, June 11, 2012

U.S. Wealth Fell 38.8% In 2007-2010 On Housing

The average American family lost 38.8 percent of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows.

Median net worth declined to $77,300 in 2010, an 18-year low, from $126,400 in 2007, the Fed said in its Survey of Consumer Finances. Mean net worth fell 14.7 percent to a nine-year low of $498,800 from $584,600.

Next to get smashed are all those holding long term Treasury securities, who think that is a safe haven, despite the likelihood of accelerating inflation down the road.

9 comments:

  1. http://www.bloomberg.com/news/2012-06-11/disinflation-momentum-hitting-u-s-rosenberg-says-tom-keene.html

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  2. I increased net worth... Precious metals. What idiots. As soon as I read what has government done to our money I went out and bought as much gold and silver as I could afford.

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  3. I was making high six figure income until 2010 and then the bottom fell out (we are talking high 5 figs). My comp is back somewhat at about 60% of what it was before the crash. I am busting my butt trying to make this a good year given all the tax hikes coming, but its looking to be average, which I am not complaining given the times we live in. I have cut, cut, cut to adapt to the lower amount and as the Obama taxes in 2013 look to cut into it further next year, I plan to cut some more. I guess the good news is I am not paying anywhere near the amount of taxes I was before so I don't feel as much like a piece of tax cattle, but it still infuriates me when I read the constant stories about government fraud and waste. Most of my friends are in a similar boat and they too are downsizing to deal with the lower income outlook and higher taxes coming.

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  4. The problem, of course, is not the subsequent loss in wealth (although, to be sure, public policy has retarded/impeded the recovery), but the original inflation of the relevant assets. So, it's not exactly right to measure the fall in wealth from a point during which relevant prices were artificially high.

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  5. Anonymous @ 10:07 PM - you didn't increase your net worth, you simply preserved it. Gold is money, not an investment.

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    1. you are an idot. Of course I increased my net worth. Gold is a store of value and preserves wealth. However, over time gold increases in purchasing power. In addition, because the market is so distorted, it didn't just preserve wealth, it increases it.

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  6. JFC, we can call the prices artificially high (like you, I think they were) but what we call them doesn't matter. What matters is that people paid those prices, meaning that they were a very real high from which people have had very real losses. So it is right to count loses from those highs. The growth is fake, but the damage is real.

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    1. Be that as it may, the loss in wealth occurred with the malinvestment was formed, not when it was revealed.

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  7. It's actually much worse than that. The 39% loss of net worth is in nominal dollars. It doesn't account for the significant loss of purchasing power of those dollars.

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