The Old Get Richer, but Not the Young
click for bigger chart
wealth young and old
Courtesy NYT


I have some good news and some bad news:

The good news is that the total wealth of US households are slowly recovering from the credit crisis and Great Recession.

The bad news is it has not been sufficient to keep up with inflation; lots of people — especially those who loaded up on debt before the collapse — are lagging.

Household wealth rose by $3 trillion in Q1, to $70.3 trillion — greater than the $68.1 trillion in Q3 2007, before the recession began. About a third of the gains were courtesy of rising stock prices, another third was rising real estate values.

All is not rosy, as Floyd Norris reminds us:

“The Federal Reserve Bank of St. Louis pointed out that there are more households now than there were in 2007, and that there has been inflation as well. As can be seen in an accompanying chart, the average household wealth at the end of the quarter was $613,635, a figure that is 11 percent below the peak of $689,996 (in 2013 dollars) set in the first quarter of 2007.

Those averages are deceptive, in that they are raised by the high wealth of a relatively small number of households. A very different picture emerges from looking at the median — the level at which half the households are richer and half poorer. That statistic can be calculated from the Fed’s triennial survey of consumer finances. In the studies conducted in the 1990s, the median net wealth was about one-quarter of the average. In the 2000s, the median fell to about one-fifth of the average, and in 2010, it was down to about one-sixth of the average.”

The bifurcated economy continues to get ever more stratified . . .



Younger Households Are Slower to Make Gains in Net Worth
Floyd Norris
NYT June 14, 2013

Category: Economy, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Young Households Falling Behind in Net Worth”

  1. NewBob88 says:

    How much of the Senior Citizens wealth was inherited? My plans are to leave my children a significant amount of money which should put them above the average by the time they are Senior Citizens. I suspect that many other Seniors will do the same.

  2. ironman says:

    Well, if you want to start fixing the situation, how about making all student loans, including and especially those student loans directly issued by the federal government, fully dischargeable in bankruptcy? It’s pretty tough to accumulate any meaningful net wealth when you’re starting your adult life so deeply in the hole….

  3. 873450 says:

    “In the studies conducted in the 1990s, the median net wealth was about one-quarter of the average. In the 2000s, the median fell to about one-fifth of the average, and in 2010, it was down to about one-sixth of the average.”

    It’s oxymoronic to claim the economy is recovering while the bottom falls out of it for half the population.
    Home Loans for Millennials
    “The next generation of potential home buyers prefer to live in developments with an array of housing types close to shops and mass transit, a recent survey shows. Is this bad news for the baby boomers who will eventually be looking to sell their big suburban houses? … generation is heavily saddled with student-loan debt — in a recent Wells Fargo survey, 54 percent of adults 22 to 32 cited debt as their biggest financial concern, with 42 percent referring to it as “overwhelming.” … Young adults are financially stymied in other ways as well. Unemployment remains a problem, credit is hard to access, and parents hurt by the recession or victim to foreclosure are less able to help out, Ms. Ross said … This generation has been through an incredibly difficult time,” she said, “and I think it is ultimately going to operate very similarly to the generation that went through the Great Depression.”

  4. rd says:

    Median student loan debt now is about $25,000. about half of high school grads are going to university. The median household income is about $50k, so the typical college grad is coming out of university with debt equal to half the median household income and probably more than 50% of their expected first year earnings.

    That debt will have an impact on their ability to buy houses and cars for the first decade or more of their working career. Unemployment is still high, partly because of the lack of savings by the baby boomers who are deferring retirement.