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typical US family's net worth: $93,100

  1. http://online.wsj.com/article/SB114070076294181273.html?mod=home_whats_news_us

    WASHINGTON -- After growing rapidly during the boom of the 1990s, the net worth of the typical American family rose only 1.5% after inflation between 2001 and 2004, the Federal Reserve said in an update of a survey it does once every three years.

    The Fed said the net worth of the median American family -- the one smack in the statistical middle -- was $93,100 in 2004. Net worth, the difference between a family's assets and liabilities, rose a robust 10.3% between 1998 and 2001 and 17.4% in the three-year interval before that.

    A booming housing market boosted the typical American family's wealth between 2001 and 2004, but stagnant stock prices and rising debt offset many of those gains.

    The report, the most comprehensive survey of household wealth, also found a widening of the gap between households at the top and the bottom of the economic ladder. "While the typical American household basically ran in place, less affluent households actually lost ground," said Stephen Brobeck, executive director of the Consumer Federation of America.

    The net worth of the typical family in the richest 10% rose to $831,600, a 6.5% increase from 2001, adjusted for inflation. In contrast, the net worth of the typical family in the bottom 25% fell 1.5% to $13,300.

    Between 2001 and 2004, as the economy pulled out of a recession, home prices rose significantly. In its survey, the Fed said the median price of a primary residence rose 22.1%, adjusted for inflation, to $160,000 in 2004. The typical homeowning family had $95,000 in mortgage debt on its house.

    During the same period, income for the median family rose only 1.6% after inflation to $43,200, a considerably smaller gain than in previous years. "The U.S. family became a family that's income poor but asset rich," said Matthew Smith, vice president of Smith Affiliated Capital, an investment firm in New York. "It all focuses around the housing market." The significance of real estate to the wealth of American families has spurred concerns that a slowdown, or even decline, in home prices could restrain consumer spending.

    The stock market was not a big plus for the typical American family in the early part of this decade -- in contrast with the late 1990s -- and the share of families owning stock or mutual funds, including retirement plans, declined to 48.6% in 2004 from a peak of 51.9% in 2001. And among those families owning stock, the value of the median portfolio fell to $24,300 from $36,700 in 2001, adjusted for inflation.

    Meanwhile, the typical family took on more debt. After declining for years, mortgage and other debt as a percentage of total family assets rose to 15% in 2004 from 12.1%, the Fed said. "The largest part of that increase was attributable to debt secured by real estate," the report said. "As debt rose over the period, families devoted more of their incomes to servicing their debts, despite a general decline in interest rates."

    Some racial disparities narrowed, the Fed noted. The percentage increase in the net worth of the median nonwhite family was three times as large as it was for a white family between 2001 and 2004. Still, the median white family's net worth, at $140,700, compared with $24,800 for the typical nonwhite family.

    The survey also found that 56.1% of all families said they saved in 2004, down from 59.2% three years earlier.

    The Fed survey is based on interviews, averaging 80 minutes but sometimes stretching beyond two hours, of 4,522 American families.
  2. what is net worth ? is this the cash & assets all you have ?
  3. Accounting 101
    Assets - liabilities = net worth

    yes, your 6 year-old paid off toyota is an asset and the new Benz on credit a liability when it is worth less than you paid for it.....
  4. thanks for explanation, it is interesting to know something about accounting

    but benz does have a value , even if it is bought on loan, if you sell the benz in the market, you can get some money. suppose benz is USD20000 and you paid USD15000 already , loan USD5000, and the current market value of this benz (now second-hand) is USD18000 only, is it correct to say, so far as this benz is concerned, it has a net worth of 18000-5000=13000 ?( assets-liability)
  5. most of the time in the usa cars depreciate faster then the loan is amoratized meaning that they have a negative value.
  6. Yes after some time paying for it your assessment is true...
    Most new cars are not worth what you paid for them brand new.
    Also most people in the US will finance the cars and that adds a great chunk to the cost of the asset. (financing cost) Yes cars are only assets when they are older, used and paid off.....
    For example I am building a house in California and I am paying (borrowing) about 330,000 USD I am getting a 5.75% deal from the state of CA as first time buyer. STILL in 35 years I am actually paying around 800,000+ USD....if I could pay in cash I would :)
  7. Andrsanm: If interest rates and inflation go way up as they did in the 1980's, you will be laughing all the way to the bank with your 5.75% loan provided it is a fixed rate loan. I expect much higher interest rates and inflation over the next few years.
  8. I know it is a "good trade" :)
    ...still it is shocking how much we actually pay for 'credit'. If I had the money in cash, I likely buy five of these houses with 20-percent down.
  9. I did not realize people were so well off.

  10. Not true, usually the more expensive cars depreciate faster and a whole lot more $, regardless of where they come from. For example, have you seen how fast a $90,000 BMW depreciates to $15,000, that's a loss of $75,000. On the other hand I've seen used cheap Sunfires a few years old still near purchase price.
  11. Shouldn't you look at the "quality" of the net worth figure?

    Asset values, particularly homes, are dynamic. Debt is static.

    I would imagine a lot of Joe Sixpacks have no more than $5,000 liquid, a lame 401K, probably no pension, and banking on Social Security at age 62. Those observations exclude re-fi's of that dynamic home value.
  12. With all of the talk of people being in debt and overextending themselves I thought it would be lower. But then again the top 10% probably lift the stat.
  13. So, after the housing bubble bursts and real estate values fall by 50%, the typical American family will be almost bankrupt?
    House value $160k -> $80k. Minus mortgage $95k equals -$15k, i.e. negative equity in home.

    And of course the poorer 25% of families will be bankrupt a lot earlier.

    Or can Helicopter-Ben save them?
  14. "Typical" net worth 93K........

    You going to believe that,
    or your lieing eyes.

    I think this net worth factoid
    is CRAP.

    Just like its daddy WSJ........CRAP.
  15. I'm suprised about the net worth of an american family.
    Isn't the US the richest country in the world?

    In my country the net worth per family appears to be about 307000 euro ( or approx 240000$).
  16. Hello spike500
    It's an illusion. A false appearance. That is the current case compared to just 50 years ago. The generation of adults that went through the 1930's depression and WW2 were much better off then the rest of the world until the plastic charge card came along. Buy Buy Buy on credit was the thing to do and that is a completely different mindset then 50 years ago. It's quite easy to dig yourself into a hole buying on easy to get credit. If the housing market does sell off big time, there will be a lot of people hurting from a net worth point of view. agpilot

    Edit: I'll add that my opinion is that the average mindset (money wise) is weaker now then it was 40 to 60 years ago. People that went through the 1930 to 1950 era had a stronger sence of net worth and could be counted on to really make an effort to pay off any debit.. Now they often walk away from loans or run for a lawyer.

  17. I would be really interested in knowing which country you are in
    that has a a net worth of $240,000.00 per family. I assume you
    mean this as a median figure?

    And how much are the top 10% worth as compared to the bottom 25%?
  18. 307000 Euros=240000$ ??? Do you know we are not in october 2000 anymore ? :D
  19. My wood-grain is paid for and I do not have any loans, besides my mortgage. Am I better off? say than someone with a net worth of 250k with 200k of liabilities?

    If the average american family has 20k of credit card debt and additional car loans....wouldn't the quality of debt matter?

    Michael B.

  20. well, people and media have a tendency to talk about money they don't have as opposed to what they do.

  21. that would happen if we approach depression like environment. why such doom and gloom here?

  22. The Gummint provided the data. At best, probably an exaggeration... at worst an out-and-out lie.

    Whenever Gummint tells you something is good, you should suspect it's a lie and conduct your business accordingly.
  23. Sorry, divided instead of multiply. Correct amount is 389000$.
  24. I miscalculated. Net worth is even higher: 389000$.
    It is the AVERAGE net worth, not the median. So total net worth divided by the population.

    We have less super rich people and (much) less poor people. Wealth is better spread than in the US.
    To me it is more important that most of the population has 300000 euros than the american situation where many have nothing and few have much.
    Overhere EVERYBODY has a basic healthcare that is affordable, i think i pay less than 100 euros a year.

    An example: my daughter was hospitalized last mont. Total cost:895.13 euros.
    I had to pay 6.45 euros plus 1.50 euros for supplements. Total: 7.95 euros; the rest was paid by health care.
  25. 73% of our population have their own house. So wealth is fairly well spread.
    Of course the top and bottom 10 % will show spectacular excesses. But that's inevitable.
  26. Well, if you study the fundamentals of housing, you will find that it is very likely that house prices will fall quite soon and A LOT. Also that should trigger a recession, since the economy has depended on housing for so much and for a long time.
  27. Only the speculators or those that grossly overpaid will be hurt. The average "Joe" or "Jane" will simply have to live longer in one spot to even out the equity. Even if there's a recession, only those that are overextended will get hurt. Now, we can argue if the average American is overextended or not (I think many are), but an all-out housing crash isn't going to happen. Housing prices will fall to a moderate pace and many will have to live longer in one spot. Real estate should, and historically has, returned around 5-10% (6-8% is very realistic). So those regions that have seen 30% appreciation rates will stagnate, but there's not going to be any bust anytime soon even if mortgage rates go to 10%. If anything there's a housing shortage in many key markets, appreciation will simply moderate.

    As far as overall American wealth, the main topic, savings rates and wealth accumulation statistics don't accurately take into account appreciation. Retirement accounts aren't accounted for often either. Yes Americans live in debt, but there is "smart" debt and "dumb" debt. A mortgage is what I call necessary debt and real estate equity appreciation isn't accounted for in net worth statistics. The three SUV's in the driveway is "DUMB" debt.

    Fact: The main source of accumulated wealth for the average American is their primary residence.

    If you haven't over-leveraged against that investment, then you probably have seen a good jump in your net wealth the last 6 years. The problem isn't owning real estate, but tapping into that real estate's equity when it's inflated. Even if you have done that, you still will be alright more likely than not due to the fact that you will simply stay put longer than the average 3 years people spend in one spot.

    Simply put, most statistics don't accurately account for wealth, its accumulation nor its appreciation.

    "Facts are stubborn things, but statistics are more pliable."
    Mark Twain

    "There are three kinds of lies: lies, damned lies, and statistics."
    Benjamin Disraeli
  28. I want to know what country has 73% home ownership and an average $385K net family worth.

    This country must be at the top of the "richest in the world" and the USA must be about 30 places below it. (sarcasm).
  29. Personally, I like to look at liquidity as a measure of wealth. It's one thing to say you have a million dollars in assets (houses, cars, paper profits, etc), and another thing to say you have a million dollars liquid (cash, gold/silver).

    Both situations say you have a million dollars, but the underlying idea of real wealth puts them at opposite ends of the wealth spectrum.
  30. Agreed. Still difficult to believe the $93k stat. Take RE out of the equation and where are we?

    I'd like the see the stat (or preferably the fact) about net worth excluding the primary residence, but factoring in the mortgage. Looking at that info in combination with the average savings rate and we'll have a much more realistic profile of where we really are.
  31. Belgium.

    The figures were published by the National Bank of Belgium.
  32. It would be helpful if you could find out the median net worth as it can be a significantly different value than average due to the way how wealth is often stacked to a very small rich minority.

    For example, if there are 9 people with net worth 1000 and 1 with 1 billion, their average net worth is approx. 100 million but their median net worth is 1000. Average is highly misleading, no?

  33. With 100 Million or so samples in the US, seems that average and median are close to the same. However as I was wrong once before, I could be again.
  34. But where do you draw the line in terms of liquidity? E.g., If I have $4M in long-term GICs (or as you americans call them, CDs) I can't touch the capital. It's guaranteed interest though but it's totally illiquid.

    But yea, I can't understand including houses (other than to pad the figure and swell the ego :D ) because great, your house is worth $800K. Sell it and have 800K........but you have nowhere to live now, lol.
  35. I'm having a huge amount of trouble finding these... could you send me a link? I found the GDP per capita that was updated in 2005 that said that the average GDP per capita was $31900


    and I'm trying to imagine a situation where either a) Everyone owns their own homes b) people just can't think of anything to do with their money but save it, c) Families are HUGE or d) the rules for passing on prior generations wealth are not restrictive at all... or any of these in combination with another. A median family net worth of 385000, with 2 people earning wages within the home, would take over 6 years of spending NO money and getting charged NO taxes to build if you ignore interest... obviously this makes things rediculous, but it approximately conveys what a daunting task it would be. This might just strike me as odd because of a difference in cultural perspective, but I'd be really interested in seeing those statistics that you mentioned.

    Edited. I messed up the calculation and corrected it... still seems crazy to me.
  36. 93k? That's pathetic! Does that include retirement savings? I hope not. I am not bragging, nor am I near 1 mil yet, but 93k ain't much IMO. Heck a major medical claim could wipe that out in the blink of an eye.

    That's a sad commentary on the consumer driven US society.
  37. spike500

    Am I looking at the right website?


    Should I go to the stats or the publications section? I couldn't find it in stats... do they just publish this locally?
  38. The sample size doesn't cause the difference between mean and median, the skewness of the distribution does. And net worth is extremely skewed. The US has several people with a net worth of positive 1 billion, but no one with a net worth even approaching a negative 1 billion. :)
  39. Nobody has to have a net worth of negative $1Billion, just millions of poor people.. which we have.
  40. spike500 sounds like he is way off the mark.

    Still waiting for the evidence of 73% home ownership and 380K net family worths.


    This shows that belgium is at #11 for per capita GDP.
    Something fishy here.

    Check this out: http://www.timbro.com/euvsusa/pdf/EU_vs_USA_English.pdf

    Page 23:
    All USA households dwelling space in square feet - 1875
    Poor USA household dwelling space in square feet - 1228
    Belgium household - 928

    Now take a look at page 32
    "If Belgium were an american state, it would be the 6th poortest in the union"

    SOURCE - http://www.timbro.com/euvsusa/

    I think spike500 is misinformed. Goverment propaganda???
  41. When you sell your house that's paid for, you downsize. That's what many Americans do. You extract a big chunk of capital appreciation which is now tax advantaged (for primary residence sales) and move down in house size.

    It's the reason the average square footage per house is lower in Florida than the rest of the country.

    This business about Belgium being the richest per capita is just bogus nonsense. There are states that have economies larger than the whole country of Belgium. I agree with an earlier poster, we may be having a misunderstanding of "average" v. "median".

  42. the website:

    In most families , both parents have a job, we have about 2 children on average, pay between 10 and 20% of inheritage taxes. We learned from our parents to work hard and save hard (we have amongst the highest saving rates in the world). We buy what we can afford, not what our creditcard can give us.
  43. Can you imagine how much we would have if the taxrates were reasonable. Much of the 385000$ comes form real estate. When you marry you MUST buy or construct a house, or they will declare you an idiot.

    BTW national sport overhere is avoiding taxes.
  44. What you tell is nonsense.It is not the largest economy that is the richest. If the Us spends all in consumption and we save all our money, we will as a person be richer that a US citizen.

    All i said is that we have 73% ownership and 385000 $ net worth per family.
    I never said we had the biggest economy nor the biggest houses.

    It is so typical that so many americans get frustrated if they only even think the might NOT be the biggest and the best in the world in any area.

    To ease your minds i will confirm the following:the Americans are the biggest, the best and the only nation that has reached wealth. The rest of the world is an undeveloped area, where nobody knows what internet, telephones, computers, cars or TV's are.

    Just wanted to give information about a place outside of the US, but apparently i have to be selective and only show our bad points and the good points of the US.

    I will later on publish the article, but it will be in dutch as i don't find the english version. But that cannot be a problem for americans as they will surely speak and read more than the 4 languages that i speak and read as an undeveloped european.

    Regards from my treehouse in the woods. I went to the US embassy and asked to post this message. It took me several days as we don't have cars or bicycles. Everybody has to do everything by foot overhere.
  45. Spike... calm down... it's okay if you have your math wrong on how
    wealthy or not the people in Belgium are. Nobody is out to say
    anything negative about how small the housing is or isn't or how
    much money you really have per household or don't.

    And for the others trying to blast the USA for whatever reasons...

    We really don't give a crap. So shut up.

    You know what's funny. America is running some really high national
    debt levels yet the rest of the world expects us to contribute as much
    money as they think they can get from us. We are supposed to be
    the "World Saviours".

    And we have millions living below the poverty level in our country.
    People that need taking care of in our own country.

    Maybe we should stop helping out people in other parts of the world.

    Let them starve and die from diseases.
  46. First of all, please stay on topic. For those wanting a US vs rest-of-world shouting match, there is chit chat.

    At least on housing, you are wrong. Sales have already fallen dramatically, shortage has turned into a glut, and prices turned down. Since sales seem to continue falling and inventory climbing that downward spiral should just steepen. And that high historical return is an illusion - of course it looks great at a market top. The future, at least the next few years will be very different.

    As to how overextended the average Joe is, I'm not so sure. According to the facts presented so far, he is very extended indeed. If you, or anyone else, can find "better" stats, please post them.

    At least we agree that clearly the most important asset of average Joe is his home. IF he's more than 50% leveraged (less than 50% equity) at current home values, he WILL be wiped out IF house prices are cut in half. And 50% price declines are indeed very possible, unlike most people want to accept. In Japan real estate values fell by 80% over 15 years (and so did the Nikkei), since their bubble burst. Here we had a similar bust at around the same time with also unemployment shooting up to 20%.

    Perhaps you Americans are such optimists you don't want to believe such a crash is possible over there. This is understandable, since you have not seen it happen since the Depression. But that doesn't make it less likely.
  47. Reading plain english seems too difficult for some people.

    I will say for the last time what i said before:
    Net worth per family seems to be approx 307000 euro, and 73% of the families have their own house.

    If the National Bank lies to me than i lie to you but i didn't make the math to come to these conclusions.

    Wealth is a result of savings. I you earn 10 million dollars a year, but consume everything your net wealth is zero. If i save 1$ form my 1000$ yearly income, my net wealth is higher. Not income or GDP but savings create net wealth.

    My postings was just a statement, nothing to show off, but for certain people anything or anybody that might perhaps be better of seems to be enough to become jealous.
  48. So who made you boss? And I am only responding to an attack
    post against the US. Which 99% of any posts that involve the US
    and other countries are here on ET. A lot of jealousy when it comes
    to the USA.

    Isn't this the real reason for this thread in the first place?

    Of course it is.

    Otherwise it might read: "Typical African family's net worth is $2".
  49. Spike buddy, you are being sarcastic and rude towards Americans
    with these words. All that has been said to you is that there is no
    way in Hell that Belgium's are worth 370K Euro's each and 73% of
    you own your own homes. That is all.

    Now you say you will post this fact in Dutch? Do you really expect
    anyone here to know Dutch? Come on dude! Get real!

    Happy to hear you can speak and read in 4 languages. I guess that
    makes your intelligence higher than others...
  50. Survey says! Too small of a survey.

    Might want to survey everyone who lives in the USA.

    Survey is flawed.

    Thread over....:cool:
  51. Sorry if I sound too bossy. Just want to stay on topic.

    Not jealous, but sorry. There's going to be a severe recession in the US, many will be hurt. And it will affect the rest of the world too.

    Except perhaps Africa. Good place to invest? :)

    My motive is simply to understand the phenomenon. After all, I'm a speculator.
  52. This is more a discussion of median vs average (mean) than anything else.

    In year 2000, when mean net worth of an American family was $55,000, the average net worth was $182,381 (in year 2000 dollars).

    Extrapolating from that, with mean net worth of $93,100 the average net worth would be 308,720 which is not that much different from the Belgium figure. I couldn't find the net average worth for past year quickly enough, so I'll rest with this extrapolation.

    If you do not understand the difference between median vs mean this whole discussion is useless.
  53. NICE! I have a buddy here at the office who speaks broken dutch (very poorly, but studied it for a year). I'm still interested in seeing the article, and I wonder why they didn't post it on the english side? I hope none of my posts have come across as combative... I'm just really interested in seeing the posssibility of that high a savings rate... mostly just to know it's possible.
  54. Bron : Site "Het Laatste Nieuws" dd 11-05-2006

    Belgische gezinnen waren nooit zo rijk

    Vermogen van gemiddeld gezin was nooit zo groot als vandaag.Het nettovermogen van de Belgische gezinnen steeg in 2005 met 10 procent tot een recordbedrag van 1.382 miljard euro. Dat blijkt uit cijfers van de Nationale Bank.Een gemiddeld gezin heeft dus een vermogen van ongeveer 307.000 euro.

    Meer vermogen
    Het financieel vermogen groeide met 8 procent tot 775 miljard. Vooral de waarde van de beleggingsfondsen (+19 pct) en verzekeringsproducten (+18 pct) nam fors toe. Dat is te danken aan de stijging van de beurzen en de grote aankopen van fondsen met kapitaalbescherming en tak21-verzekeringen

    They talk about AVERAGE not MEAN.
    I will translate roughly, those who understand dutch can confirm or deny my translation:
    The text was published in a journal called "Het laatste Nieuws" and was based on a communication from the National Bank of Belgium this month.

    Belgian families were never as rich as today.

    The fortune of the average Belgian family was never as big as today. The net fortune of the Belgian families rose in 2005 with 10% to a record amount of 1.382 billion ( 1.382.000 million) euro. This appears from figures published bij the National Bank. An AVERAGE family has a fortune of about 307.000 euro

    More fortune.

    The financial fortune grew by 8% to 775 billion euro. Especially the value of investmentfunds (+19%) and insurance products (+18%) increased heavily. This is due to the rise of the stock market and the big buying from funds with capital protection and branch-21 insurances.

    Edit: savings in Belgium were between 14 and 21% of the netto income the last years. We are in the top of the world when it comes to saving.
  55. In my message above, where it reads "where mean net worth" there should absolutely read "median" not "mean" sorry I was not concentrating on my typing. Kind of renders the point intended useless when I can't hold my thoughts together.

    Was intending to polarize median vs average because median and mean sound so similar, and got caught in it myself!
  56. Can you show proof that there is going to be a "severe" recession
    in the US? And how many will be hurt? And how will this affect the
    rest of the world? Will it affect Belgium? Iraq? Brazil? China? Who?
  57. Well, it's a bit difficult to have "proof" of future events.

    But with overindebtness so common over there (and also in many other countries), it looks like many millions of Americans will face bankruptcy in the next few years as the asset bubbles are deflating.

    And a recession in the US of course will affect anybody who exports to the US, which is about every country on this planet.
  58. Well, Belgian exports go for over 70% to our european neighbours, we export only 6.52% to the US.
    An american recession will affect us, but don't over exagerate the impact. After all 6.52% of our exports can easily be shifted towards other countries. Money and energy markets will be another piece of cake.

    Predicting is often very difficult. I still remember when Iraq was invaded the first time. Journals mentioned a heavy and bloody war when the Americans would arrive in Kuweit. In reality many Iraqi's were already waving with white flags even before the battle started. So the war was over before he started. The second time the US invaded Iraq everybody thought the job would be done very fast. Well, just look were we are now. Again totally unexpected.