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POLITICS: PennAve

The median American household lost a third of its wealth in the last 10 years

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Finance and Banking,PennAve,Joseph Lawler,Economy,Housing,Income Inequality

The median American household saw its wealth decline by more than one-third in the past decade, according to a new estimate published by the Russell Sage Foundation.

Researchers writing for the left-of-center think tank found that median net worth declined from $87,992 in 2003 to $56,335 in 2013. The study examined data from the Panel Study of Income Dynamics, a longitudinal survey of American households run by the University of Michigan.

Median household wealth peaked at just under $100,000 in 2007, right before the housing bubble burst and the financial crisis began. While the researchers for the Russell Sage Foundation found that households in the top 10 percent have recovered the wealth levels of 2003, lower-wealth households have not.

“There are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession,” they wrote.

Wealth, or net worth, includes the value of all assets owned by a household, including real estate and stocks and bonds, minus any debts. Houses, which constitute the most important source of wealth for most families, remain well below their pre-housing crash highs.

The report also found that wealth has become more concentrated in the past decade. In 2003, households at the 95th percentile of wealth held 14 times as much as the median household. In 2013, it had 24 times the wealth.

The Russell Sage Foundation study includes data from 2013, a feature other measures of wealth do not have. But the finding that the median household lost roughly a third of its wealth over the decade matches up with data from other sources. For instance, New York University economist Edward Wolff, using data from the Federal Reserve's triennial Survey of Consumer Finances, found that median household wealth fell by a similar amount after the crisis, from about $90,000 in 2001 to $60,000 in 2010. Results from the 2013 Survey of Consumer Finances will be released early next year.

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Author:

Joseph Lawler

Economics Writer
The Washington Examiner

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