Average American Family Income Declines February 23, 2006
According to an AP story, the average income of American families, after adjusting for inflation, declined by 2.3 percent in 2004 compared to 2001.
The Federal Reserve reported Thursday that the drop in inflation-adjusted incomes left the average family income at $70,700 in 2004. The median, or point where half the families earned more and half less, did rise slightly in 2004 after adjusting for inflation to $43,200, up 1.6 percent from the 2001 level.
The median, or midpoint for net worth rose by 1.5 percent to $93,100 from 2001 to 2004. That growth was far below the 10.3 percent gain in median net worth from 1998 to 2001, a period when the stock market reached record highs before starting to decline in early 2000.
After technology stocks crashed in 2000 and in 2001, the 9/11 incident in NYC, it makes sense that the average income of American families declined. Although the economy in America is reported to be strong now, companies are cautious about their spending. As for net worth, I’m not sure if that includes the values of their homes or stock, but if so, a net worth increase of just 1.5% from 2001 to 2004 is pretty small. (The negative savings rate as reported earlier doesn’t include the value of the home or stock portfolio). With the inflation rate at around 2%, decline in family income, and net worth, it’s obvious we have to take steps to create a better spending plan and save for our future. The USA can’t count on our home equity as a source of money too long!
Source:
By MARTIN CRUTSINGER, AP Economics Writer
Comments»
The inflation rate is a lot more than 2%, because the government and the FED don’t include things like housing, which has seen an explosion due the FED’s lowering of interest rates between 2003 and 2005, in their calculations. This means that middle class families have lost a lot more in terms of net worth than is being reported.
Moreover, now that Greenspan’s book is out, and Bernanke is being thoroughly exposed in current Congressional hearings, how can anybody trust anything these profligates say?
It’s a shell game being played on the American people, where the top tier makes out like a fox in the hen house (witness an aggregate increase in the net worth of the Forbe’s 400, between Sept. 2005 and Sept. 2006, of a whopping 26%), and everybody else loses, big time.
We are now living in a recreation of the old Roman Empire in its decline, where the currency was being inflated to pay the massive bills of the bloated and out of control empire, creating an ever widening gap between the rich and the poor.