Chart of the Day: The Fed's Hard Numbers
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- Published on Wednesday, 13 June 2012 08:00
- Written by Adam English, Associate Editor, Inside Investing Daily
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The Federal Reserve just released the latest version of its Survey of Consumer Finances report and -- big surprise -- it does not look good.
Fed economists conduct the survey every three years to produce a snapshot of household statistics that are more detailed than broader, more frequent reports about the economy.
Both median and mean net worth dramatically decreased. The median fell 38.8% and the mean fell 14.7%.
To translate the information into real numbers, median net worth declined to $77,300 in 2010 from $126,400 in 2007.
That represents an 18-year setback. The last time median net worth was that low was in 1992.
To make matters worse, incomes also suffered. From 2007 to 2010, the median family income before taxes fell 7.7%, while mean income fell 11.1%.
Lance Roberts, CEO of Streettalk Advisors LLC in Houston, stated: "What you see is an economy that's really very, very stressed for the bottom 60% to 70% of the population that's struggling just to make ends meet."
All of the information points to severe shortcomings for retirement plans. With less net worth and income, fewer people can afford to save for the future.
The proportion of families with retirement accounts decreased 2.6 points to 50.4% from 2007 to 2010. It wiped out much of the 3.1% increase during the 2004 to 2007 period.
Anemic growth in jobs, further income losses and housing prices at rock bottom virtually guarantee that very little will change in the next report.
The Fed's numbers reflect a hard reality for Americans, but it should also serve as a call to action.
We cannot do much on our own about housing and income, but we can help ourselves by investing and saving what we can.