(In 3rd paragraph, corrects median net worth to $77,300 in
2010, not $77.3 trillion, and corrects to $126,000 in 2007, not
WASHINGTON, June 11 Americans suffered a record
decline in wealth between 2007 and 2010 as home values tumbled,
according to a Federal Reserve report on Monday that underscored
the severity of the recent recession.
The median family's net worth dropped 38.8 percent during
the three-year period, the Fed said in its latest report on
changes in U.S. Family Finances, derived from a survey of
consumer finances. Fed economists told reporters that this was
the biggest drop in net worth since the survey started in 1989.
The median net worth, which is the value of assets minus
debt, plunged to $77,300 in 2010 from $126,400 in 2007. Net
worth in 2010 was at levels last seen in 1992.
"Although declines in the values of financial assets or
business were important factors for some families, the decreases
in median net worth appear to have been driven most strongly by
a broad collapse in house prices," the Fed said.
The survey's findings shine a harsh light on the devastation
inflicted on the economy by the 2007-09 recession and could help
to explain the frustratingly slow pace of the recovery.
The housing market's collapse was at the core of the
recession, during which the economy contracted nearly 5.1
percent between the third quarter of 2007 and the second quarter
of 2009, with the unemployment rate rising 4.5 percentage points
to 9.5 percent.
"Housing was of greater importance than financial assets for
the wealth position of most families," the Fed said.
The survey found that the decline in median net worth was
large for families in groups where housing was a larger share of
assets, such as families headed by someone 35 to 44 years old
and families in the West region.
"A substantial part of the declines observed in net worth
over the 2007-10 period can be associated with decreases in the
level of unrealized capital gains on families' assets," the Fed
The share of total assets of all families attributable to
unrealized capital gains from real estate, businesses, stocks,
or mutual funds fell 11.6 percentage points to 24.5 percent in
2010, it said.
While the overall level of debt owed by families was
unchanged, debt as a percentage of assets rose to 16.4 percent
in 2010 from 14.8 percent in 2007 because the value of the
underlying assets, especially housing, decreased faster.
The share of families carrying a credit card balance fell
6.7 percentage points to 39.4 percent in 2010. The median
balance fell 16.1 percent to $2,600 in 2010 from $3,100 in 2007.
The proportion of families with debt payments greater than
40 percent of their income was nearly unchanged between 2007 and
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)