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Family Incomes Slipped In 1st Part Of Decade ("Rich getting richer" alert)
The Associated Press ^ | Feb 24, 2006 | MARTIN CRUTSINGER

Posted on 02/24/2006 6:24:09 AM PST by Sam's Army

WASHINGTON - After the booming 1990s when incomes and stock prices were soaring, this decade has been less of a thrill ride for most American families.

Average incomes after adjusting for inflation actually fell from 2001 to 2004, and the growth in net worth was the weakest in a decade, the Federal Reserve reported Thursday.

Many families were struggling in the aftermath of the 2001 recession and the bursting of the stock market bubble in 2000, the Fed's latest Survey of Consumer Finances showed. The comprehensive look at household balance sheets comes every three years.

Average family incomes, after adjusting for inflation, fell to $70,700 in 2004, a drop of 2.3 percent when compared with 2001.

That was the weakest showing since a decline of 11.3 percent from 1989 to 1992, a period that also covered a recession.

The average incomes had soared by 17.3 percent in the 1998-2001 period and 12.3 percent from 1995 to 1998 as the country enjoyed the longest economic expansion in history.

The median family income, the point where half the families made more and half made less, rose a tiny 1.6 percent to $43,200 in 2004 compared with 2001.

Economists said the weakness in the most recent period was understandable given the loss of 2.7 million jobs from early 2001 through August 2003, when the country was struggling with sizable layoffs caused by the recession, the terrorist attacks and corporate accounting scandals.

The weak income and the stock market decline in the early part of the decade, which wiped out $7 trillion of paper wealth, had an adverse impact on family balance sheets.

Net worth, the difference between assets and liabilities such as loans, rose by 6.3 percent in the 2001-04 period to an average of $448,200. That gain was far below the huge increases of 25.6 percent from 1995 to 1998 and 28.7 percent from 1998 to 2001, increases that were fueled by soaring stock prices.

The 2001-04 performance was the worst since net worth actually declined by 9.9 percent in the 1989-92 period.

The report showed that the slowdown in the accumulation of net worth would have been even more sizable except for the fact that homeowners have enjoyed big gains in the value of their homes in recent years.

The gap between the very wealthy and other income groups widened during the period.

The top 10 percent of households saw their net worth rise by 6.1 percent to an average of $3.11 million while the bottom 10 percent suffered a decline from a net worth in which their assets equaled their liabilities in 2001 to owing $1,400 more than their total assets in 2004.

"This is the continuing story of the rich getting richer," said David Wyss, chief economist at Standard & Poor's in New York. "Clearly, the gains in wealth are going to the top end."

Democrats used the new report to blast President Bush's economic policies, contending it would be wrong to make permanent his tax cuts, which primarily benefit the wealthy.

"These statistics show why, even though GDP is rising, most people do not feel better off," said Sen. Charles Schumer, D-N.Y.

The Fed survey found that the percentage of Americans who owned stocks, either directly or through a mutual fund, fell by 3.3 percentage points to 48.6 percent in 2004, down from 51.9 percent in 2001.

Analysts said this was an indication that investors burned by plunging stock prices in the decade's early years have been leery about getting back into the market.

The share of Americans' financial assets invested in stocks dipped to 17.6 percent in 2004, down from 21.7 percent in 2001.

Reflecting the housing boom, the share of assets made up by home ownership rose to 50.3 percent in 2004, compared with 46.9 percent in 2001.

The Fed survey found that debts as a percent of total assets rose to 15 percent in 2004, up from 12.1 percent in 2001. Mortgages to finance home purchases were by far the biggest share of total debt at 75.2 percent in 2004, unchanged from the 2001 level.

There was concern that families might start to feel even more squeezed as the cost of financing their debts increases along with rising interest rates.

Although surging home values have supported consumer spending in recent years, analysts worry about the economic impact if, as expected, the home price surge begins to slow this year.

"This report shows a race between factors boosting net worth, such as home ownership, and factors pushing the other way, such as weak wage growth," said Jared Bernstein, senior economist at the liberal Economic Policy Institute, a Washington think tank.


TOPICS: Business/Economy; Extended News
KEYWORDS: income
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To: expat_panama
:-)
181 posted on 02/27/2006 5:34:55 PM PST by nopardons
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To: inquest
Ping!

Here's a new thread that contains just the sort of thing that Mase and I was discussing with you earlier. I haven't even made it down to the first 50 post and already there's 'questionable' content from FReepers who are supposed to be supportive of capitalism and limited government. Enjoy!

182 posted on 02/27/2006 5:39:43 PM PST by LowCountryJoe (The Far Right and the Far Left both disdain markets. If the Left ever finds God, the GOP is toast.)
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To: nopardons
Its amazing how clairvoyant you are...

Were you born that way or did you learn it?

While your busy nailing down all options and facts...and even the relative knowledge of everyone around you...care to expound on the cessation of M3 and reported rates of inflation?


183 posted on 02/27/2006 5:40:17 PM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: billbears
THE SKY IS FALLING, THE SKY IS FALLING, THE SKY IS FAAAAAAAAALLLLLLLLLLLLLLLLLLLLLLI................

Oh please...that stupid "fiat money" garbage again? Fine, go buy all the gold you can lay your hands on and refuse to accept those "soft" dollars! LOL

The market will NEVER crash, as it once did and FWIW, the CRASH OF '29, was hardly the only such "crash" in the history of Wall Street. And then, there are all of those rules and regulations and safety nets in place, now, which make an impossibility for anything like that, to ever happen again.

Even FDR wasn't able to impose things, that you are implying some politician, in the future will do.

184 posted on 02/27/2006 5:45:14 PM PST by nopardons
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To: r9etb
It was never "your job". You should view yourself as an entrepreneur that rents out your labor services to those willing to hire you in THEIR businesses. The job was there as an opportunity extended to you and was never really yours: it was proven when that business owner/manager decided to go with someone [or something] else that gave him a better return for the expense incurred.
185 posted on 02/27/2006 5:45:15 PM PST by LowCountryJoe (The Far Right and the Far Left both disdain markets. If the Left ever finds God, the GOP is toast.)
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To: A. Pole
All unions are on their last legs, in Amedrica, right now.

Unions, in America, predate FDR by 50 years or more.

186 posted on 02/27/2006 5:47:13 PM PST by nopardons
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To: A. Pole
No, I wouldn't and your crystal ball is cracked. You have no idea who or what I am.

OTOH, you have proved to everyone who reads your posted tripe, that you are a SOCIALIST!

187 posted on 02/27/2006 5:48:56 PM PST by nopardons
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To: A. Pole

WHY DO YOU PERSIST IN CALLING ME A "HE", WHEN YOU HAVE BEEN DISABUSED OF THAT IDEA, AT LEAST 30 TIMES?


188 posted on 02/27/2006 5:49:55 PM PST by nopardons
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To: antaresequity
Sweetums, it was YOU who started the clairvoyant garbage, by claiming that the DOW is and shall continue to fall; not I.

It is YOU, who are shorting the dollar, when the dollar is strong and the Euro isn't; not I.

Methinks that your projection complex is the least of your worries. ;^)

189 posted on 02/27/2006 5:53:15 PM PST by nopardons
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To: djreece
Yes, but not even many Christians these days will advocate things such as "free will". Sadly, many Christians have perverted the Good News by being overly judgmental of others, meddling to others, and intolerant towards others.
190 posted on 02/27/2006 5:53:45 PM PST by LowCountryJoe (The Far Right and the Far Left both disdain markets. If the Left ever finds God, the GOP is toast.)
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To: William Terrell
But Homo-economicus understands that each individual can [and does] have different needs, wants, preferences, and derived utilities, and therefore rarely satisfied by the same things as others. Trying to create equitable arrangements [usually by the benevolent asshat leadership of the society that thinks they are promoting the common good through altruism] doesn't work because it ignores these differences and removes the proper incentives/disincentives.
191 posted on 02/27/2006 6:00:44 PM PST by LowCountryJoe (The Far Right and the Far Left both disdain markets. If the Left ever finds God, the GOP is toast.)
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To: nopardons

Well once again you have assumed incorrectly havn't you...

I am long the dollar against the YEN and Sterling...right now...need a quote?

As to the EUR I think its a near term long bounce and then a resumption of its decline into mid-later summer...perhaps 1.15-1.16...then the dollar will resume its decline...across most of the currencies...

So...once again...your assumptions are wrong...and you have made an A$$ of yourself...


192 posted on 02/27/2006 6:00:52 PM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: antaresequity

ROTFLOL...that's a far cry from what you posted before. But as to making a fool of one's self, I suggest that you look into the nearest mirror, to see one. ;^)


193 posted on 02/27/2006 6:05:19 PM PST by nopardons
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To: nopardons
Oh dear...your are ill-informed aren't you?

Being long the the dollar has nothing to do with being long or short the equity markets of that currency...

You do realize you can be long the dollar and short the underlying equity market at the same time don't you?

You do understand the relative effect of a currency's interest rate on the value of that currency relative to another don't you?

Are you even remotely aware of what the interest rate differential is between say USDJPY or EURUSD ?

Stop babbling before its too late sweetheart...
194 posted on 02/27/2006 6:10:39 PM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: antaresequity
Oh yoooooooooooo hooooooooooooooo...................

Come read this post of yours; it is the direct opposite of what you later asserted.

Here, in this post, you say that you are "short american(sic) eq(sic) mkts(sic).................."

195 posted on 02/27/2006 6:12:46 PM PST by nopardons
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To: nopardons

Your confusing equity markets with currency markets...they have nothing do with one another - other than the denomination of that equity market...

You are confused...

This discussion is over...


196 posted on 02/27/2006 6:15:18 PM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: antaresequity
I'm far better informed than you are; not to mention the fact that I don't post something and then complain when someone calls me on it and then post something completely different, claiming that the first post meant the same thing as the second one.

It took three post, THREE, by you, to state what perhaps you are really doing; maybe. LOL

You are the one who babbles; dear. :-)

197 posted on 02/27/2006 6:16:23 PM PST by nopardons
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To: billbears
"I believe in a free market system. However what we currently have could not be considered free market in the least."

I concur. On both points.

198 posted on 02/27/2006 6:16:24 PM PST by Sam Cree (absolute reality) - ("Reality is merely an illusion, albeit a very persistent one." Albert Einstein)
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To: antaresequity
I am short american eq mkts...

I gave short positions my best shot a while back.   Seems like every time I screened for the worst of the worst they always did a turn around right after I sold short. 

I find I've done so much better just going long on the best of the best.  I've never been any good at betting against the long term odds.

199 posted on 02/27/2006 6:17:25 PM PST by expat_panama
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To: antaresequity
You are Clintonian, in the way you speak out of both sides of your mouth.

OTOH, far from being "confused", I am your worst nightmare, because I wont accept your double-talk.

200 posted on 02/27/2006 6:18:18 PM PST by nopardons
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