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Monday, June 11, 2012

The End of the Middle Class

The NY Times details:

The recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday.

A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss.

Families’ income also continued to decline, a trend that predated the crisis but accelerated over the same period. Median family income fell to $45,800 in 2010 from $49,600 in 2007. All figures were adjusted for inflation.
The chart below outlines median family net worth among different percentiles. While all wealth brackets have witnessed a hit since 2007, the wealthier you are... the less you've likely been impacted in percent terms (they were less levered / more diversified in their investments and are less reliant on income from a job for their wealth). Since 2001, it is even more divergent as the only bracket to have seen an increase in wealth are those in the top 10% decile of all wealth.