NCPA - National Center for Policy Analysis

Americans' Financial Condition Has Improved

February 12, 2003

The most recent Federal Reserve report based on the 2001 Survey of Consumer Finances helps explain why our economy isn't weaker, says financial writer Scott Burns.

Here are a few highlights:

  • Debt service has fallen from 14 percent of personal income in 1992 to 12.5 percent in 2001 -- although debt increased, payments are lower due to lower interest rates.
  • The proportion of families who spent 40 percent of their income on monthly payments was 10.8 percent in 1992, peaked at 12.8 percent of families in 1998, and fell back to 11 percent in 2001.
  • Median family net worth rose, the bear market notwithstanding, from in $61,300 in 1992 to $86,100 in 2001, an increase of 40 percent.

Fed economists estimate that as of October 2002 -- what some say was the bear market low -- median net worth had declined to $80,700, which was still a 32 percent increase over 10 years.

The median isn't distorted by the very large gains and losses that occurred at the top 10 percent. The median net worth in the top 10 percent of households increased from $822,600 in 1992 to $1.15 million in October 2002, up 39 percent from 1992.

  • Households in the third quartile -- those between the median and top 25 percent -- owned a median $8,300 in individual stocks and $15,300 in automobiles.
  • They owned about $15,000 in mutual funds (of all kinds), and had $30,000 in retirement accounts.

The median net worth may have grown only 32 percent, but we've still had net improvement after the 25 percent inflation of the period.

Source: Scott Burns, "Fed report offers nice reality check," Dallas Morning News, February 9, 2003.


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