Impressive Net Worth Numbers
By impressive, I mean disastrous. The Federal Reserve issued a bulletin for June, 2012, indicating the changes to net worth of American families between 2007 and 2010. Here is a quick summary of the data:
Does that seem okay to you? Me neither. The median household net worth is down 40% in 3 measly years. And that only includes 2010. Despite a tepid recovery in equities (about 9% in the past 18 months), I would guess the numbers are even worse for 2011 and YTD 2012. Not only is the decline pathetic, but so was the starting point. The year 2007 was at a high point in the economic cycle, and is up there with the highest net worth estimates of all time. So at one of the best times in recent history the net worth of people under the age of 34 was a whopping $12,400. I can’t remember the last time my checking account fell below that number. And this FELL to $9,300. Young people can’t save $1,000 a year? They have so little the equity markets can’t be blamed for much of that loss, and they obviously can’t afford a home. I’m going to surmise that since there are no jobs that people are raiding their savings accounts to pay the bills.
And the situation is almost as bad for the next age group. People that are around 40 years of age only have $42,000. Assuming they’ve had 18 years to work since graduating college, that’s a savings of a whopping $195 a month. This also assumes zero growth, dividends, or interest in that time period. For those that didn’t go to college, it’s only $159. A lot of people are irresponsible, credit-loving dolts. That’s a fair statement. But many people would actually like to save, and gain some financial stability while they are still of working age. So why hasn’t it happened? Because there are serious structural issues in this poorly-run nation of ours. There are so many things to blame I’d need an anthology, but here’s a few culprits:
1) Sending our jobs to China
2) Importing far more than we export. Although we have exported quite a few millionaires.
3) Stagnant wage growth. Actually, wage declines. This can be blamed on Wall Street.
4) Wall Street
5) Our good ole’ Government. Which pretty much encompasses the first four points.
The solutions are simple. They really are. They’re just not “politically favorable”. Reduce the corporate tax rate, slap some more tariffs on Chinese import goods, and get the hell out of our way. That would solve 90% of the problem. But no one has the gall to make the tough “politically unfavorable” decisions. So our net worth will continue to crumble, our nation will devolve into the 3rd world, and we’ll all have to get ready to live out of a cardboard box eating ramen for dinner. Welcome to the new America, and enjoy the ride.Explore posts in the same categories: Uncategorized