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Middle class hemorrhaging
A report on the wealth of the American people released last week more than confirmed that America's middle class was decimated by the Great Recession.
According to the Federal Reserve, the recession that began in 2007 and supposedly ended in 2009 reduced the average American family's median net wealth to levels not seen since 1992. The decline was helped along by the dramatic drop in home values. The housing crash hit middle class families especially hard since homes typically represent the bulk of a middle class family's net worth.
The Fed said families with incomes in the middle 60 percent of the population in the country lost a larger share of their wealth over the three-year period than the wealthiest and poorest families. Not surprisingly, that was due to the equity that middle class families lost in their homes from 2007-2010. The average equity a middle class family held in its home dropped from $110,000 in 2007 to $75,000 in 2010.
According to the Fed, a typical middle class family's net worth was $77,300 in 2010. In 2007, a middle class family generally posted a net worth of $126,400.
Incomes took a hit, too, during the Great Recession, according to the Fed.
The median family income fell to $45,800 in 2010 compared to $49,600 in 2007. Those figures were adjusted for inflation.
Surprisingly, the Fed noted that America's less fortunate – median family income in the bottom 20 percent – saw their earnings rise from 2007-2010. Wealthier families, by and large, emerged from the recession in fairly decent shape, too.
Meanwhile, the average income of the wealthiest families dropped more sharply than the median income. That's an indication that many of those who are classified as super wealthy took it on the chin financially during the Great Recession.
James Carville, the architect of Bill Clinton's rise to power, pointed out in an opinion piece for CNN that if America's super wealthy lost some 40 percent of its net worth over a three-year period, we would witness anarchy in the streets. Carville also acutely noted that the mainstream media all but ignored the Fed report on the demise of the middle class.
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