How to Understand Effects of the Great Recession on U.S. Family Financial Life

Step-by-Step Guide

1. 1

   Step 1: Search into losses of the American family average totaling 39% of its wealth from 2007

   47.6% of these families said they had saved in 2010, the lowest of all age groups.
   
   Overall, 52% of all families put money into savings that year.
   
   In 2001,
   62.3% of families headed by the 35- to 44-year-olds had saved money that year, the highest percentage savings in all age categories in the Fed report! This indicates the decline in those saving has gone
   -- down a raw
   8.4% which is
   13.5% of
   62.4%, the previous amount
   -- falling to only 54% from
   62.4%. , By contrast, the young families, headed by those under 35 years old, had the biggest drop in median income, falling more than 10% to $35,100 in
   2010. , Families headed by college graduates saw their median incomes fall just a hair less than 10%, to $73,800 from $81,900.,, Now the 2012 Federal Reserve official report states how harshly the recession has hit families, and how they reacted.
   
   Families who were in "median or middle" values had or owned:
   Stock
   -- dropped more than a third to $12,000 from $18,500, on average.
   
   Home real estate
   -- decreased an average of $18,700.
   
   Credit or debt
   -- worsened to $75,600 from $70,300.
   
   Income dropped
   -- down to $49,800 from $50,100. , That was reverse of the continual increase of "carrying" debt to: "paying off" all debt
   -- for the first time since
   2001. , Those below the median national income in 2007 actually saw their earnings recover a little by
   2009. , The report also reveals that:
   Over 60% of families saw their wealth decline over the period.
   
   Americans have increased their savings rate across the board so less money is being spent or pumped into the economy. , Real estate is such a big share of the economy
   -- and its drop in value has taken a big chunk out of HNW of families, and it can take years to settle and recover.
   
   It could likely be near a decade.
2. 2

   Step 2: 2009 plus 2010 as the "Great Recession" brought HNW down and back 20 years to as low as the early 1990s level of family wealth.

3. 3

   Step 3: Notice

4. 4

   Step 4: the HNW fell

5. 5

   Step 5: in four years

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   Step 6: a chilling total of $49

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   Step 7: 100 to $77

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   Step 8: including 2010

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   Step 9: starting from an over-heated $126

10. 10

    Step 10: 400 in 2007

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    Step 11: adjusted for inflation

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    Step 12: in the Federal Reserve report June 11

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    Step 13: Check this drop-off

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    Step 14: steeper than the Fed's quarterly reports had previously indicated showing the severity of the 2007-12 recession and the minimal recovery that has been meandering sluggishly.Young middle-age heads of family (35- to 44-year-olds) have had median HNW drop 54% to $42

15. 15

    Step 15: 100 over the period.

16. 16

    Step 16: Look at all families' finances

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    Step 17: as the median income fell to $45

18. 18

    Step 18: 800 in 2010 from $49

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    Step 19: 600 three years earlier — a 7.7% decline

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    Step 20: spread through all population groups.Families headed by people ages 65 and over

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    Step 21: many on fixed incomes

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    Step 22: and doing more-conservative investing

23. 23

    Step 23: didn't see much erosion of real incomes between 2007 and 2010.

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    Step 24: Look into the biggest percentage drop occurring in families headed by people with "some college education": Their incomes fell to $42

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    Step 25: 900 from $47

26. 26

    Step 26: down 10.3%.

27. 27

    Step 27: Recognize the survey of U.S. households

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    Step 28: that was first performed in 2007

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    Step 29: repeated in 2009 to gauge the effects of the recession

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    Step 30: shows the median/middle HNW fell $29

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    Step 31: 000 from $125

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    Step 32: 000 in 2007 to $96

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    Step 33: 000 in 2009:

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    Step 34: Understand that in the 2008 financial crisis trillions of dollars of "value evaporated" from household wealth.

35. 35

    Step 35: Pay off debt

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    Step 36: if possible

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    Step 37: as some have been doing -- getting "out of debt" -- as the Fed report notes: The share of families with debt decreased 2.1 percentage points to 74.9 percent over the 2007–10 period.

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    Step 38: Look at earnings of other families (those below and above median):Families starting above the national average in 2007 saw their incomes decline.

39. 39

    Step 39: Read about families in the top 10% of HNW in 2007 saw their incomes down by 13% on average

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    Step 40: a phenomenon the Fed attributed to large declines in capital gains and in business

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    Step 41: farm or self-employment income.

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    Step 42: Be prepared for the housing market continuing to be down

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    Step 43: across all sectors.

Detailed Guide

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