New York, N.Y., United States (4E) – Sinking home values have contributed to a 39 percent decline in the median U.S. household from 2007 to 2010.
A Federal Reserve report Monday underscored the impact of the financial crisis and the recession on the average American.
Taking the biggest hit to their net worth, the report said, were middle class families because much of their wealth was in their homes, whose values plummeted during the recession and in its aftermath.
Wealthier families saw a lesser drop in their incomes, but nowhere near as much impact on their net worth.
Median incomes among the richest 10 percent of Americans slipped 5.3 percent, compared with 7.7 percent for all Americans. The median net worth of the wealthiest 10 percent actually increased. The median is the point where half are above and half below.
Overall, median household net worth tumbled to 1992 levels after adjusting for inflation, erasing the gains of the late 1990s Internet boom and the post-2000 housing surge, the Fed said.
The impact on any given family diverged depending on where they reside, how much they earn and what kind of investments they held.
The median family’s net worth dropped to $77,300 from $126,400 in 2007. The wealthiest 10 percent of families saw their median net worth rise 1.9 percent to $1.17 million.
Before the recession hit in December 2007, household net worth peaked at $66 trillion. It fell to $54 trillion in 2008, according to the Fed. It was $63 trillion in the first quarter of 2012, but that amount does not reflect the stock market’s slide since.
The Fed estimates Americans lost $7 trillion in home equity due to a housing bust that followed a surge in mortgage defaults after 2006.
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