Federal Reserve survey shows family net worth
grew over quarter-century as income stagnated
By SAM PIZZIGATI
WASHINGTON (PAI) — The “av-
erage” U.S. family is doing just fine in
net worth, the Federal Reserve says in
its latest triennial portrait of household
wealth. But typical Americans are
struggling something awful. Analysis
of the report shows both statements are
true.
The agency’s Survey of Consumer
Finances covers just how well the na-
tion’s families are doing economically.
The Fed takes this surveying seriously.
But the survey involves much more
than standard public opinion polling of
SEPTEMBER 19, 2014
1,000 or so individuals by random
phone calls. Federal Reserve re-
searchers conducted over 6,000 inter-
views, each running usually for an
hour and a half. Most get conducted
in person. And interviewers delve into
every aspect of modern economic ex-
istence, from monthly car payments to
mutual funds.
The latest consumer finances report,
released Sept. 4, covers 1989-2013.
The report’s new numbers essentially
offer up the most detailed economic
portrait yet of American family fi-
nances over the last quarter-century.
Some economists argue that the pic-
ture the new Fed numbers paint does-
n’t look all that bad. They cite family
net worth, which has increased.
In 1989, after adjusting for infla-
tion, the average American family had
$336,100 more in assets than liabili-
ties. Last year, American family net
worth averaged $534,600, up 59 per-
cent.
Conservatives use the data to con-
tend the economy must be working.
But a closer look at the family net
worth numbers paints a different pic-
ture.
NORTHWEST LABOR PRESS
Analysis of the Fed’s report shows
the economy is working, but only for
the affluent. The growing wealth of
these affluent, the new Fed data show,
is driving up America’s average family
net worth. But straight averages can
mislead — and even deceive, other
economists note. If nine people each
have zero net worth and a tenth person
holds a fortune worth $10 million, the
average person in that 10-person group
will be a millionaire.
Medians, by contrast, tell more
about how everyday families fare. At
the median point, half the people in
any distribution have more, half less.
In 1989, the new Fed survey says, the
median U.S. family held $84,800 in
net worth, after adjusting for inflation.
In 2013, America’s most typical
families held $81,200, 4 percent less
than in 1989.
That data shows the typical U.S.
family is moving economically in re-
verse, losing wealth. And in specific in-
come brackets, the losses in family net
worth become even more pronounced.
Families in the statistical middle
class — the nation’s middle 20 percent
of income earners — held a median net
worth of $75,300 in 1989. Their me-
dian net worth in 2013: $61,700, down
18 percent.
Up at the nation’s income summit, a
different story: America’s top 10 per-
cent of income earners — families that
pulled in over $154,600 in 2013 —
saw their median household net worth
rise 61 percent, to $1,130,700, in the
quarter-century that ended last year.
How much did top 1 percent wealth
rise during that span? The Fed’s report
doesn’t break down a top 1 percent fig-
ure. But it supplies some numbers for
the top 3 percent.
This lofty cohort, the new Fed re-
port notes, owned 44.8 percent of the
nation’s wealth in 1989, 51.8 percent
in 2007, and 54.4 percent in 2013.
Actually, the top 3 percent had a
higher share of America’s net worth
than the Fed numbers indicate. The
reason: The Fed’s wealth totals do not
reflect any of the wealth of America’s
400 richest individuals. Fed re-
searchers, for “confidentiality” rea-
sons, purposefully do not take these
top 400 fortunes into account.
“Persons listed by Forbes magazine
as being among the wealthiest 400
people in the United States are ex-
cluded from sampling,” the survey ac-
knowledges. Forbes will release its list
at the end of September. Last Septem-
ber, it reported those 400 held a com-
bined fortune worth $2.02 trillion.
The combined fortune of 400 typi-
cal American families last year? A bit
over $32 million. The data show we
would have to assemble just over
62,000 groups of 400 typical American
families to equal the $2.02 trillion of
the Forbes 400, or 24.8 million fami-
lies (62,000 X 400 each) overall.
(Editor’s Note: Sam Pizzigati is ed-
itor of Too Much, a project of the Insti-
tute for Policy Studies Program on In-
equality and the Common Good.)
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