What's in your wallet?

A new Federal Reserve report shows an after-inflation drop in average family incomes.


Tim Grieve
February 24, 2006 2:01AM (UTC)

In his State of the Union address last month, George W. Bush described an economy that is "healthy and vigorous." A new report from the Federal Reserve explains why it might not feel that way to you.

The Fed says that average family income, after adjusting for inflation, fell more than 2 percent between 2001 and 2004 -- a dramatic and unhappy turnaround from the 17 percent gain in average after-inflation income Americans enjoyed during the prior three-year period.

Advertisement:

Of course, income averages tell only part of the economic story. Some of the other numbers are worse, and they suggest that the rich-getting-richer, poor-getting-poorer dynamic is alive and well in America today. For the poorest 20 percent of America's families, the Fed says, median net worth dropped 11 percent, to $7,500, between 2001 and 2004. For the richest 10 percent, it rose by a respectable 4 percent, to $924,100.

But even for those lucky ducks, the gains may be short-lived. The Fed says that a major part of the growth in net worth came from the explosion in housing prices over the last three years. If the real estate bubble finally bursts -- and it's sure feeling leaky in some parts -- those paper gains could disappear. Don't expect renters to shed any tears. The Fed says homeowners saw a 1 percent increase in their net worth over the last three years. For renters, it was a 22 percent drop.


Tim Grieve

Tim Grieve is a senior writer and the author of Salon's War Room blog.

MORE FROM Tim Grieve

Related Topics ------------------------------------------

U.s. Economy War Room

BROWSE SALON.COM
COMPLETELY AD FREE,
FOR THE NEXT HOUR

Read Now, Pay Later - no upfront
registration for 1-Hour Access

Click Here
7-Day Access and Monthly
Subscriptions also available
No tracking or personal data collection
beyond name and email address

•••






Fearless journalism
in your inbox every day

Sign up for our free newsletter

• • •