The Federal Reserve reported the findings from the study that it does every three years on consumers. This article highlights the results for the period between 2007 and 2010. Median net worth fell by 40% during this period from $126 to $77 thousand. Median household wealth comes primarily from the equity that they have in their homes. Most of the decline in wealth came from a 42% fall in home equity. The value of median family stock holds fell 8% to $44 thousand. To make matters worse, median income fell 8% to $45.8 thousand over the three year period. The net worth of the wealthiest families increased slightly during this period.
The Federal Reserve report explains the slow economic recovery in the US. Declining wealth and income in the middle class affects consumption which is 70% of GDP. It also affects business investment which responds primarily to demand for products and services. The Federal Reserve forecasts a continuing slow recovery from the Great Recession.
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