Fed Survey Details Recession's Impact on Family Finances
The financial crisis and recession battered many American families' finances, and a newly released Federal Reserve study details the extent of the damage. Since 2007, U.S. families' net worth and income—measured by the median and mean levels—have fallen sharply, according to the Federal Reserve Board's Survey of Consumer Finances for 2010.
Falling home values primary culprit
Meanwhile, real (inflation-adjusted) median family income before taxes fell 7.7 percent from 2007, the time of the last Fed survey, to 2010. Median income dropped to $45,800 in 2010 from $49,600 in 2007. The new survey is based on data collected in 2010, and figures are reported in 2010 dollars.
The mean, or average, measures of family income and net worth also fell substantially between 2007 and 2010, the Fed survey shows. Mean income fell 11.1 percent, while the mean net worth declined 14.7 percent.
Overall value of debt down, but leverage ratio up
The overall value of families' liabilities decreased between 2007 and 2010, but debts fell more slowly than assets. Accordingly, the ratio of the sum of the debt of all families to the sum of their assets—the leverage ratio—rose to 16.4 percent in 2010 from 14.8 percent in 2007. The leverage ratio for families with debt increased at a faster pace, to 22 percent in 2010 from 19.4 percent in 2007.
June 28, 2012