The Great Recession erased so much off the value of family assets that their wealth fell back to levels not seen since 1992, the Federal Reserve said Monday in a new study.
One of the big culprits was the fall of home values, but also of unrealized gains on stocks, mutual funds, and businesses, the Fed said, an event that put strains on families’ ability to borrow and on many older Americans’ plans for retirement.
Family income in the same period fell 7.7 percent, according to the Fed’s new survey of family finances from 2007 to 2010.
Incomes dropped from a median of $49,600 in 2007 to $45,800 three years later, as millions were laid off or found incomes from businesses slashed by the economic contraction.
The fall in the net worth of families was much more stunning, 38.8 percent, showing just how deep the crisis rocked the country. Median family wealth had soared from $106,100 in 2001 to hit $126,400 by 2007. Then in three short years, it plunged back to $77,300, the level of 1992.
And while Americans slashed their debt over the three-year period, by 2010 the ratio of debt to household assets was higher — 16.4 percent of assets — because asset values had sunk.
The Fed’s study gave a darker and more accurate view than what had been seen in earlier government figures on what happened to families and incomes during the US economic crisis, further explaining why the recovery has been so tough and prolonged.
While assets like stocks have rebounded in value since then, home values continue to fall despite interest rates having been cut to record lows. Of course, there are other reasons why the economy is so weak and the Federal Reserve wasn’t going to point out the obvious.
The rich are getting richer. The top one percent took home 93 percent of US income growth from 2009 to 2010, and those figures are likely even better for the 1 percent from 2010 to 2011. The financial markets have pushed corporations to slash jobs and cut wages and salaries so that income can be redistributed to rich shareholders. That’s why median family income growth is down. It’s been redistributed to the one percent, not just by Wall Street, but also by legislators such as Senator Ron Wyden and Congressman Earl Blumenauer.
They knowingly voted to redistribute income when they voted yes for the South Korea free trade agreement. That makes it easier for US businesses to ship jobs from here to there, or create jobs there that would have otherwise been created here. The difference between the old higher wages here and the new lower wages there go into the already fat wallets of the affluent political contributors via higher corporate profits, rising dividends and soaring sharing prices.
That’s why middle and working class family incomes dropped from a median of $49,600 in 2007 to $45,800 three years later, as millions were laid off or found incomes from businesses slashed by the desire of corporations to redistribute incomes from the 99 percent to the 1 percent.
That’s a loss of $3,800 per working family, but it didn’t disappear. Abra cadabra! That money was redistributed to the 1 percent and is the reason why those parasites received 93 percent of total US income growth. In other words, the middle class was robbed of an average of $38,800 and that amount and more was redistributed to the 1 percent.
This income redistribution is why the stock markets have been soaring under Obama.
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The One Percent Took Home 93 percent of total US Income Growth from 2009 to 2010
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