Federal Reserve’s shocking revelation figures of fall in the Net worth Incomes of American Families

The Federal Reserve Survey of the Consumer Finance revealed shocking details of how the current economic crisis left the median American family in 2010 with incomes declining to the levels of early 1990’s that erased almost two decades of accumulated prosperity. This report covers the years 2007 to 2010 exhibiting the impact of the so called Great Recession. The median family income fell to $45,800 in 2010 from $49,600 in 2007 after adjusting these figures for inflation.  About three quarters of the loss is ascribed directly to the crash in the housing prices.

Familial incomes continued to decline which was a trend prior to the crisis but speeded up over the same period. This survey which is released every three years is one of the broadest and deepest sources of information about the financial health of the American families.The study further highlighted that drop in net worth is marked more in Black and Hispanic households than in Whites.

In case of White Households, the net worth dropped from $134,992 to $113,149 during 2005 and 2009 and in the same period the Black Household net worth dropped from $12,124 to $5,667. In percentage terms, the household net worth of the blacks for the same period of 2005 and 2009 dropped by almost 60%.  It also reported that black population was severely devastated by the housing scam of subprime loans.

The survey also revealed that the American families have reduced the number of credit cards that they carried and about 32% of families said they had no cards that were up from 27% in the year-2007. The Federal Reserve report also highlighted an interesting fact that in the first time of the history of survey, education loans made up a larger share of the family’s obligation than loans to buy automobiles.  Therefore, the family’s with education debt rose to 19.2% in 2010 from 15.2% in 2007.

The survey found that the recession has in fact reduced the inequalities in the United States at least for a temporary period. In this sense, the average income of the wealthiest families fell more sharply than the median that indicated that some of the wealthier families at the top ladder slipped down to a few lower rungs. As per the ranking of the American families by income, the top 10% of households still earned an average of $349,000 in the year-2010 and the average net worth of the same families was worth $2.9 million.

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