Federal Reserve survey shows decrease in family incomes

The Federal Reserve conducts a Survey of Consumer Finances every three years to see how American households are holding up. The survey results released this week indicate that family incomes have declined and net worth growth has slowed down. Between 2001 and 2004, average family incomes dropped 2.3% after adjusting for inflation. The survey also reported that:

• Net worth increased 6.3% but this is the smallest increase since the 1989-1992 recession period. This drop would have been larger without the increase in home prices to drive net worth gains.
• The gap between the rich and the poor widened significantly.
• The wealthiest 10% of Americans (making over $129,000 a year) saw their net worth increase 6.1% to an average of $3.11 million.
• At the same time, the poorest 10% of Americans saw their net worth drop to negative $1,400 of their total assets.
• 40% of Americans families make less than $33,900 a year.
• Fewer people are investing in the stock market and more are investing in real estate. The number of people who owned stocks dropped 3.3%.
• Mortgage debt increased more than 27% and median total debt increased 34%.

What does this mean? Unless you are in the wealthiest 10% of the population, you may be feeling the pinch. While the overall economy has grown, very little of this growth has "trickled down" to average Americans.

What do you think about these survey results from the Federal Reserve? Where do you fit in to the statistics? Where do you think we'll stand when the next Federal Reserve survey is released in 2009? Share your feedback in the comments section below.

Comments

[Emma]

Well, I consider myself an average American. Definitely not wealthy, yet.

"While the overall economy has grown, very little of this growth has "trickled down" to average Americans. "

I think the wording is inaccurate. In order for the average American consumer to grow, financially speaking, we can't expect to have wealth "trickle down". I think that is one of the main reasons the distinction between poor and rich exists. The rich or wealthy are smart about money. Many of them are also first generation wealthy. That means they started out like you and me. So what's our excuse in the land of opportunity and plenty?

The statistics aren't surprising. They're not pretty, but they are what they are. Hopefully, more Americans can use those numbers as a motivator to prosper. I'm afraid that, like most situations, most Americans will blame the government or someone else for a problem that they created and can resolve themselves. Time will tell.