The Federal Reserve reports today that American families have about the same net worth under the Obama administration that they had 20 years ago when George H.W. Bush occupied the White House, leading Republican strategist Bradley A. Blakeman to tell Newsmax, “It’s like Groundhog Day.”
The Fed’s findings, which are contained in its latest Survey of Consumer Finances, found that median wealth for families plunged by 39 percent to $77,300 in 2010 — down from $126,400 in 2007. The median marks the point where half of U.S. families had more and half had less. The recession officially began in December 2007 and ended in June 2009.
“This is a scary and ominous sign, not only of the present but of the future,” charged Blakeman in an exclusive interview after the findings were released. “It’s like . . . we’re back in 1992. It is bizarre.”
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Former GOP presidential candidate Rick Santorum agreed in an email to supporters this evening.
“Regardless of what President Obama says, the private sector is not doing fine,” penned the former Pennsylvania senator. “Out of control government spending, growing entitlements, heavy regulatory burdens and national debt continue to impede business growth. We need jobs, but in this environment, business growth is almost impossible.”
Blakeman, who was a senior member in the last Bush administration, noted that net worth takes years for Americans to build. “Net worth is something that you accumulate over time, and it takes a long time for people to amass assets, yet their assets were almost wiped out overnight in 2008 and they’ve never seen a recovery of the assets they’ve lost,” he said.
After adjusting for inflation, the Fed’s report indicates that Americans are no better off than they were years before the start of the dot-com bubble, the housing bubble, 9/11, or the Iraqi war.
“People are looking at their IRAs. They’re looking at their housing prices — and you’re supposed to appreciate in value, not depreciate,” said Blakeman, a professor of public policy, politics, and international affairs at Georgetown University who appears regularly on Fox News and also is a Newsmax contributor.
“We’ve been in a depreciation cycle, which has hurt people — especially of retirement age, or people who have been retired a while — because they’ve seen their incomes drastically reduced and now they have a problem making ends meet.”
The Fed’s detailed Survey of Consumer Finances, which has been done every three years dating back to 1989, attributed much of the drop in net worth — from 2007 to 2010 — to the collapse of the housing market, which drove down home values.
Among families that owned homes, the Fed survey found that their median home equity declined from $95,300 in 2007 to $55,000 in 2010, a drop of 42.3 percent.
The Fed survey found that median incomes also fell from $49,600 in 2007 to $45,800 in 2010, a drop of 7.7 percent.
“This tells me that the recovery that the president claims — that the private sector is doing fine — certainly shows that the private sector is not doing fine at all,” added Blakeman, noting that the report shows President Obama has done little to raise up average Americans under his watch.
“All you have to do is look at housing prices that have tumbled. Look at your IRAs. My IRA is down about 30 percent,” said Blakeman. “And it’s likely not to recover any time soon to what it was prior to 2008. So instead of me being ahead — or even catching up to where we were in 2008 — we’re still far behind. The net worth of the average American has tragically been reduced and this president is the reason why the recovery has not happened. We’re digging ourselves a deeper hole, both in net worth and in future debt.”
While the Fed survey found that the proportion of families carrying a credit card balance fell to 39.4 percent in 2010, American families still got hammered overall, largely due to the 42.3 percent decline in home equity. The percentage of families with credit card balances had been 6.7 percent higher in 2007.
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Moreover, the median balance of credit card balances fell from $3,100 in 2007 to $2,600 in 2010, a drop of 16.1 percent.
The Fed’s survey of consumer finances contains information only through 2010. A separate survey the Fed released last week showed that total family net worth climbed 4.7 percent in the January-March quarter to $62.9 trillion, about 28 percent above its recession low. The increase was fueled by stock market gains.
Those gains put net worth about 5 percent below its pre-recession peak of $66 trillion. But since the first quarter ended, lower stock prices have eroded some household wealth.
The proportion of families with debt that had a debt payment that was late by 60 or more days during 2010 rose to 10.8 percent, up from 7.1 percent in 2007.
“It is fair to blame the president because our country is not showing the signs of recovery because of his policies,” Blakeman insisted, pointing to Obama’s emphasis on healthcare reform while Americans continued to suffer.
“Businesses and everybody are being put on hold while the Supreme Court now takes on this case. He created a constitutional crisis on healthcare at the expense of the economy and the housing crisis.”
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