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If you're feeling poorer these days, maybe you are. A recent study from the Russell Sage Foundation has found a dramatic decline in the net worth of the average American household over the last decade.

After adjusting for inflation, the average household net worth of $87,992 in 2003 had plunged to $56,335 in 2013 – a free-fall of 36%. Part of the decline might be explained by the collapse of the housing market and the wave of foreclosures that followed.

Net worth is measured by balancing the value of assets against liabilities. Households that had significant equity in real estate took a massive hit when home prices began to fall in 2007.

The researchers cite the Case-Shiller Home Price Index, showing home prices in the largest U.S. metros lost 33% of their value between 2007 and 2009. In many cases homeowners who thought they had plenty of equity suddenly discovered they had none, and in fact were under water.

Job market

But housing doesn't explain all of the decline in net worth. Massive job losses after 2008 account for a good bit of the lost ground.

The July 2013 unemployment rate was 7.4%, down significantly from the Great Recession high of 10%. However, in mid-2007 the jobless rate was 4.7%.

While the current jobless rate is well below 7% the numbers also show that millions of people have dropped out of the labor force. Millions more are working part time, or for less money than they were before.

The researchers studied the Panel Study of Income Dynamics (PSID), a nationally representative survey of U.S. families conducted since 1968. And while the average net worth declined by one-third, the loss was even more dramatic for households below the average.

Falling farther behind

For example, for those in the 25th percentile of net worth – households that only had half that of the average household – net worth plunged by 68.4%. Their 2003 net worth of $10,129 had fallen to $3,200 by 2013.

Even households in the 75th percentile found their net worth had eroded in the last decade, but not nearly as much. Their net worth declined from $302,221 to $260,405, a decline of 13.8%.

Did any households improve their net worth? Those in the 90th percentile did slightly and those in the 95th percentile – the top 5% – registered a 14.4% gain.

From this, the authors conclude that through 2013 there has been little evidence of recovery from the losses of weath experienced by American families during the Great Recession. Moreover, these losses were not distributed equally.

Improvement since 2013?

Have things improved for American households in the last year? There has been no surge in the economy that would suggest major improvement, but in recent months there have been hopeful signs.

Job creation has increased, though incomes have remained stagnant. Food and gasoline prices have gone up, putting strain on family budgets.

Despite that, however, consumers have begun to spend more on things besides necessities. The Deloitte Consumer Spending Index showed an increase in June, reversing months of stagnation or declines.

"Strengthening home prices in May and a drop in unemployment claims put the Index in positive territory, showing a consumer's ability and willingness to spend," said Daniel Bachman, Deloitte's senior U.S. economist.

Is it a bankable trend for the future? Wages were down slightly in June, but the Index authors say there are enough indicators showing the labor market is back, which they think should offset the wage component's impact on household spending.

Still, American families have a lot of ground to make up.


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