This chart is shocking. The median net worth of all households in the US was $70,000 in 2009 according to a new report from the Pew Foundation. Think about that for just one minute. This means that 50% of all the households in the US (57 million HH) have a total net worth less than $70,000. If you add up their home equity, 2.2 automobiles, their 401ks, their savings accounts, their furniture and their electronic gadgets and subtract their mortgage debt, auto loans, student loans and credit card debt, you get $70,000 or less.
This data supports my Peacock Syndrome theory to the max. Americans might look like they own a lot of cool stuff, but most of them are in debt up to their eyeballs. They don’t own shit. They are renting their shit on credit. Anyone looking at this info with a critical eye would realize that these people are fucked. Anyone who approaches retirement without hundreds of thousands in savings is going to work until the day they die, or live a life of squalor in their old age.
The figures for blacks and hispanics are beyond comprehension. It leads me back to my questions about the luxury cars I see parked in West Philly, the satellite dishes on $25,000 hovels, and the supposed poor talking on their cell phones. It never added up in my mind. It didn’t add up because it doesn’t add up. When 50% of all the black households in the country have less than $5,677 of net worth, you know my observations are correct.
With north of 50 million households essentially living on the edge, how far do they have to be pushed before social unrest and chaos break out? I think it is closer than anyone thinks, especially with Washington DC not stepping up to save anyone again.
Here is a link to the complete report:
The wealth gap between whites and each of the nation’s two largest minorities—Hispanics and blacks—has widened to unprecedented levels amid the housing crisis and the recession, according to new research.
The disparities are the greatest since the government began tracking such data a quarter-century ago, with the gulf separating whites from other groups twice as wide as it was in the two decades prior to the recession and 2008 financial crisis, according to the study.
“In the four years between 2005 and 2009, there was a sudden and steep increase in wealth disparities,” said Rakesh Kochhar, a senior Pew researcher and co-author of the report. He said that “using average, as opposed to median, net worth would not paint as accurate a picture because it would give greater weight to wealthier households.”
The gloomy picture was precipitated by the housing bubble’s collapse in 2006 and the recession from late 2007 to mid-2009, which took a “far greater toll” on the wealth of minorities than whites, according to the report.
From 2005 to 2009, inflation-adjusted median wealth plunged two-thirds among Hispanic households and 53% among black households, compared with just 16% for white households.
Wealth—the sum of such assets as a home, cars, stocks, bank and retirement accounts, minus the sum of debt—is a key indicator of economic well being, alongside income. Income refers to wages, interest, profits and other sources of earnings. The main difference between wealth and income is that wealth can be passed on.
“Wealth can establish the financial status of a family for generations,” said Mr. Kochhar, who is an economist.
Late last year, the U.S. Census Bureau reported that the number of Americans living in poverty was at a 15-year high.
For all groups, home ownership is the biggest contributor to net worth. The surge in home prices early in the past decade was accompanied by a historic increase in home-ownership rate, to 69% in 2009 from 64% in 2004. But plummeting house values then became the biggest cause of the erosion in household wealth, the study found.
The price drop had a more detrimental impact on minorities than on whites: Hispanics and blacks derive more than half of their net worth from home equity, whereas it accounts for 44% of a white household’s net worth.
As a result of the declines, the median black household had just $5,677 in wealth in 2009, while the median Hispanic household had $6,325. The median white household had $113,149 in 2009.
The two-bedroom house of Laevonne Gordon, an African-American from Escondido, Calif., was worth $265,000 when she bought it in 2005. Now, it is valued at $81,000, and she is behind on her monthly mortgage payments. “I’m trying to get a loan modification so I can keep the house,” she said during a visit to Community Housing Works, a counseling agency in San Diego.
Hispanics were hardest hit by the housing meltdown because they are concentrated in areas that suffered the biggest depreciation in home values—Arizona, California, Florida and Nevada.
The median value of directly held stock and mutual funds dropped the most for Hispanics and blacks. The value fell 32% for Hispanics and 71% for blacks. For whites, the value fell 9%. Blacks and Hispanics in financial distress might have been compelled to sell stocks or stop contributing to their pension plans, diminishing the value of their holdings, Mr. Kochhar said.
Given that a bigger share of whites own stocks and mutual funds, and have retirement accounts, the stock-market rebound since 2009 is likely to have benefited white households more than minority households.
Extended unemployment and shrinking income are also likely to have adversely affected household wealth, said the Pew study.
Ms. Gordon, a mother of three in the process of getting a divorce, has been delivering newspapers since her home day-care-center business went downhill because many of her clients lost their jobs and their homes.
The findings are based on Pew’s analysis of data from the Survey of Income and Program Participation, an economic questionnaire distributed to more than 36,000 households by the U.S. Census Bureau in late 2009.