Incomes are up, the stock market is soaring, and home prices have largely recovered from the mortgage meltdown. But Americans still haven’t regained all the wealth they lost and, on the whole, are worse off than in 1998.
The Federal Reserve’s just-released Survey of Consumer Finances, done every three years, tells a stubbornly grim tale. Median net worth for all families, measured in 2016 dollars, dropped 8% since 1998. (The survey’s definition of families includes single people and childless couples and is equivalent to how other government surveys define households.) In addition:
- The lowest income families — the bottom fifth — saw their net worth fall 22%.
- Hardest hit is the working class, the second-lowest income tier, whose net worth declined 34%.
- Families in the middle, with incomes from $43,501 to $69,500, treaded water, up just 3.5%.
- For the top 10%, net worth rose 146% since 1998. In 2013, the last time the survey was done, net worth for the top 10% had risen about 75% since 1998.
Net worth is what people own — their houses, cars, retirement and savings accounts — minus what they owe in mortgages, student loans, credit cards and car loans. An analysis of the 2016 data shows that people in the lowest two income bands are getting squeezed from both ends.
Americans own less and owe more
Median debt for all families increased by 25% since 1998 but rose much more sharply for the lower and working classes. Debt was up 57% for those with incomes below $25,300 and up 58% for those with incomes between $25,301 and $43,500. By contrast, debt for the middle class — households with incomes from $43,501 to $69,500 — rose 12.5%.
Homeownership dropped in all income categories but most steeply in the bottom three. The homeownership rate fell 11% for the lower class, 7% for the working class and 5% for the middle class. Among the highest-earning families, the decline was less than 2%. The value of their homes, though, rose 66%, compared with 25% overall.