[Smlr_net] FRB Survey Shows Middle Class Took a Big Hit

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From the Center for Economic and Policy Research (*http://bit.ly/KUHTac)*:*

*Fed Survey Shows Middle Class Took a Big Hit*

Dean Baker CNN, June 13, 2012

The Federal Reserve Board’s newly released triennial Survey of Consumer Finance (SCF) confirmed what most of us already knew: The middle class has taken a really big hit. It showed that between the 2007 survey and the 2010 survey, the typical family had lost 38.8 percent of their wealth. In fact, the wealth of the typical family was down 27.1 percent from where it had been a decade ago in 2001. This is in spite of the fact that the economy was more than 15 percent larger than in 2010 than it had been 2001.

It wasn’t just wealth that had dropped; the survey showed that income had fallen as well. Median family income in 2010 was down by 7.7 percent from its 2007 level and 6.3 percent from its level a decade ago.

There is not much surprising about these numbers. The SCF is picking up the impact of the collapse of the housing bubble. For the vast majority of middle-class families, their home is by far their largest financial asset. For decades they were encouraged to believe that it was a safest way to save for the retirement or other purposes.

This clearly was not true when house prices became inflated by a bubble. In the years when the bubble reached levels that were clearly unsustainable, from 2002-2007, housing was just about the worst possible place to keep wealth.

Unfortunately, tens of millions of Americans listened to experts like then Federal Reserve Board Chairman Alan Greenspan, who assured the country that there was no housing bubble. According to press accounts, Mr. Greenspan has a very nice pension and a job that pays more than $1 million a year. For the rest of this article, see http://bit.ly/KUHTac

Donna L. Schulman Director, Carey Library dlschulman@work.rutgers.edu 732-932-9608 (office) 732-932-8677 (fax) Labor Education Center, 50 Labor Center Way New Brunswick, NJ 08901