As the average American family continues to whittle down their budgets, a Federal Reserve Survey of Consumer Finances sheds some light on just how much families are trying to stretch their dollars.
The survey is taken every three years, and the latest report covers the time span between 2007 and 2010 – a very tumultuous financial period for people across the country.
Unsurprisingly, the report did not bring glad tidings of household finances, but reflected a 40% decrease in the average American family’s net worth – from a median net worth of $126,400 in 2007 to $77,300 in 2010. This is the steepest decline in family income since 1992. When adjusted for inflation and before taxes, median family income fell from $49,600 in 2007 to $45,800 in 2010.
Much of the decline is attributed to the devaluation of the housing market, with the majority of middle income families having their net worth tied up in their homes. The financial pinch was felt the worst in the western and southern regions of the Unites States.
Savings rates also took a hit, with the percentage of Americans reporting the ability to set aside money falling from 56.4% in 2007 to 52% in 2010, another low since the 1990s.
Despite the loss of income, net worth, and savings, families managed to see a decrease in debt. Over the three year period the share of families with debt decreased slightly to 74.9%. Families who owed more than 40% of their income saw a modest decline, but families who were at least 60 days past due on loans increased up from 7.1 percent in 2007 to 10.8 percent in 2010.
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