Chart of the day: Median net worth, 1962-2010
The big news from the Fed this week is, in the words of the NYT headline, that Family Net Worth Drops to Level of Early ’90s. But if you look at the actual report, there isn’t any data in there on family net worth before 2001. So many thanks to Peter Coy, who actually went ahead and ran the numbers.
Now these are Coy’s numbers, not the Fed’s. But Coy uses the Fed’s data, and here’s what he comes up with:
According to these numbers, the median family net worth in 2010, $77,300, is lower than it was in 1989, when it was $79,600. And it might well even be lower than in 1983, when, according to a different methodology, it was $88,000.
The 1962 and 1983 numbers can be compared to each other but not directly to the rest, because the methodology changed. But the fact is that they’re just as likely to be too low as they are to be too high. And as a general guide to household net worth, I think it’s fair to say that the median US household is no richer now than it was 30 years ago.
And in case you’re wondering whether things might have gotten better since 2010, the answer is almost certainly no. In 2007, median household net worth was $126,400, while the median amount of home equity was $110,000; in 2010 net worth had dropped to $77,300, while home equity had dropped to $75,000. These days, home equity is net worth. And since house prices haven’t recovered since 2010, it’s safe to assume that net worth hasn’t recovered either.
The fact is that household net worth was pretty inadequate even at the top of the housing bubble in 2007. Families need a place to live, and if you strip out the housing component of the net-worth calculation, the median US family has barely any net worth at all. Certainly nothing they can retire on. This of course is why Social Security is so important: with the recent drop in net worth, there’s no realistic chance that the median US family will ever save up enough to live on when they’re no longer earning money.