The median net worth of the American family fell by almost 40 percent between 2007 and 2010, according to the Federal Reserve report released on Monday.
The drop between 2007 and 2010 wipes out 18 years of economic progress for Americans in the middle of the income distribution, taking the median household net worth to levels not seen since the early 1990s.
The Survey of Consumer Finances published by the Federal Reserve Board on a triennial basis reveals the depth of the financial destruction wrought by the housing crisis. Between 2007 and 2010, median net worth fell from $126,400 to $77,300 - a 38.8 percent drop - while average net worth fell 14.7 percent percent.
Incomes fell sharply as well. Median income fell by 7.7 percent and the average income fell by 11.1 percent. Prior to the 2007-2010 period, median income had remained unchanged, with the mean rising 8.5 percent.
Hardest hit were Americans whose biggest asset was their house because Americans in this group also experienced the biggest declines in median incomes as a percentile of net worth.
The poor suffered the most: “From 2007 to 2010, the median for the lowest quartile of net worth fell from $1,300 to zero—a 100 percent decline; at the same time, the mean for the group fell from negative $2,300 to negative $12,800.”
Saving fell overall to 52 percent, the lowest level since the survey began collecting this information in 1992. This is expected because many Americans have been using savings to support themselves in lieu of a job.
Historical context reveals just how wild the ride has been in the years leading to the crash. Between 2001 and 2004, the median household’s net worth remained stable around $107,200, then increasing by 2007 to $126,400 before the drastic fall. Much of that increase was due to the housing bubble, of course, and its deflation caused the median home equity to fall to $55,000 in 2010 from $95,300 in 2007, a 42.3 percent drop.