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.
No ma'am I sure don't. I need me one of you edukated folks to explain it all to me. Maybe you need to put your entire post in extra large blinking red font. That so helps an argument. Jeez lady, put the bottle down. I sat through enough courses while achieving my degree (we have colleges down here too) to understand the pros and cons of regulation. Regulations that have only been in place for 70 years. I do so love 'conservatives' advocating a continuation of FDR's policies
People/societies have used all kinds of things as "money". Just like gold, paper and salt and shells and all kinds of other things, are worth whatever someone says they are. At one time, spices were worth far more than gold; so was salt.
You so smart...What was the value of the gold, salt, spices, etc. based upon? The free market. If the supply of said product flooded the market, the value of that product and its trading value dropped. Who stepped in if the value of the product dropped? No one. What is the dollar based on? What the Fed says its worth. Yeah that's laissez faire if I've ever seen it...
Iran and yes, Venezuela want to manipulate the market, the HATE America and ANYTHING, that they and others see as possibly hurting us, is just hunky dory with them.
Ah, I see. Choosing to base your product's price on anything except the dollar is 'hate'. I wonder if the Brits felt the same way when other nations chose to switch to the dollar instead of the pound. I could search for documentation but I doubt they were juvenile enough to classify such a switch as 'hate'. Or to bomb a nation into oblivion to ensure that nation stayed on the dollar standard
I'm most assuredly NOT a damned Patsie; never was. I'm as much, if not MORE a Conservative as you are.
No, I never called you a patsie. I called those that were anti Wal-Mart and trade unions patsies. You, you're just a harmless partisan. And I've challenged you on this in the past but I would be more than happy to compare conservative values. I can most definitely assure you, every one of my stances can be traced back to the Framers. Yours OTOH are definitions of conservatism that can only be traced to the early 20th century progressive movement. I've read your posts. You are a good Republican, nothing more
nopardons is clueless as to market dynamics, exchange rates and monetary policy...
She is endlessly fascinating to play with...like a cat with a mouse...all of her fantastic wiggles and jerks and she is still a mouse to be eaten...
Seemingly she loves to blow smoke up the bull pole...
Stop drinking the bong water and perhaps you'll stop hallucinating so much.
Actually, the SEC was formed by FDR; however, rules and regulations covering trades etc., began under the BUTTONWOOD TREE; which is where the NYSE began.
Yes, there have been lots of changes, since those early days, in the streets of Manhattan, but then, crooks keep coming up with new schemes and scams.
During the time that America was on the gold standard, there were fewer rules and regulations covering the market and banking, there was a constant cycle of PANICS, DEPRESSIONS ( the one from '29 - the early '40s , was hardly something new ), RECESSIONS, AND BANK FAILURES. I take it that that's what you would like to go back to, from what you've been posting.
Hmmmmmmmmmm...history is certainly not your forte. Governments have decided what the price of gold was to be, if memory serves...which it does. :-)
Have you no recollection of gold at $35 an ounce? Did the "free market" set that price? Ummmmmmmmmm...why no, it didn't.
Oh, so Iran and Venezuela don't HATE America? Trying to manipulate currencies, by them has nothing whatsoever to do with their shared dream of harming us and bringing us to our knees? REALLY?
ROTFLMSO.............you haven't the fainest idea what the FFS stood for, what their "values" were, nor, fir that matter, what mine are. But do keep yourself puffed up and warm, with the thought of just how "special" and "superior" you are, because nobody else thinks so; just you.
A Projection Complex is a funny thing, especially when you keep exposing yours. :-)
LOL
Where did you get that?...googling up wikipedia...
LOL...how utterly predictable...
GEEE....you sound like such an expert...
LOL Whats next?....I half-assed biography on Morgan?
Of course. QED, once Bush was in office for all of, oh, 10 minutes, it was ABF!
Don't GOOGLE, neither have I ever laid eyes on Wikipedia; however, I do know that Wikipedia isn't worth much, since lots pf people post all kinds of utter bilge there, I guess that's where you get your info from, though.
Uh huh...sure...all day long...the only possible use for the internet would be posting dribble and diatribes...
Sigh
You appear to believe that FR's only use is for you to post your dribble(sic) and diatribes; not to mention self aggrandizing mewlings, falsehoods, lies, fallacious junk, and to play word games on.
Define "liberal": our founder's were "liberal" in the word's classical sense.
In other times, in seasons of tyranny and confusion, liberal meant the liberalization of liberty.
My take.
Meant in the word's modern sense .... "more liberal" means "further left." It's good that you prompted the distinction.
The point was to provide an example of "faceless capitalism." And, whether intentionally or not, your response is an excellent example of it.
Socialism with a face is so much better at providing jobs. That's why German unemployment is 12.2% and French unemployment is 9.6%. It's a good thing that socialism has a face, because otherwise it would be a complete failure.
Context is a good thing, Todd. You should learn about it.
Now why would I be foaming? Because someone came to America to escape Communism and now wants to impose Communism on America? Because you came to America and blame your failures on the rich somehow stealing from you? To protect yourself from those evil rich guys, you want to raise taxes, increase redistribution and eliminate the ability of Americans to leave an inheritance to their children.
Why would arguing with an ungrateful, bigger government loving immigrant make me foam?
I'm always willing to learn. So teach me.
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