Tags: middle | class | wealth | household

Reports: US Middle-Class Wealth Shrinking

Monday, 04 Aug 2014 10:35 AM

By Dan Weil

Overall, U.S. household net worth climbed to a record high of $82 trillion in the first quarter, but things aren't going so great for the middle class.

Jordan Weissmann of Slate cites two studies that illustrate this fact.

One comes from the Russel Sage Foundation and shows that median household net worth dropped about 20 percent from 1984 to 2013, when the figure totaled $56,335.

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The second report, from New York University economist Edward Wolff, shows that by 2010, median household net worth had dropped to its lowest level since at least 1969. Net worth plunged 47 percent between 2007 and 2010 alone, he states.

Those four years included the housing bust and the 2008-09 stock crash, which hammered many Americans. The huge rise in household debt in recent years also put a crimp in household net worth.

Consumer credit outstanding rose to $3.2 trillion in May from $2.6 trillion in 2009.

As for the record level of overall household wealth in the first quarter, rising stock prices, rising home values and rising employment gave Americans a boost, experts say.

"The deleveraging on the consumer front has largely run its course, and we've obviously been helped by the run-up in financial assets," Omair Sharif, a U.S. economist at RBS Securities, tells Bloomberg. "Balance sheets have been improving pretty substantially over the last few years."

Household net worth now exceeds its 2007, pre-recession peak of $68.9 trillion by $12.9 trillion.

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