Earlier this week the Federal Reserve (Fed) released the key findings of their most recent Survey of Consumer Finance. The report, which occurs every three years, is a comprehensive survey of family finances, focusing on income, net worth, assets and liability.
When NPR’s Morning Edition, and other news sources, discussed the survey’s finding they focused on the hit to the middle class, however a deeper look at the report makes it clear the impact fell heavily on many low-income families. The survey reports the median net worth for the lowest quartile fell from $1,300 to zero during the period from 2007 to 2010. The mean net worth for this same group also declined; falling “from negative $2,300 to negative $12,800.”
Still, the Fed’s report does show some lower income families managed to accumulate additional wealth during this period. The figures for the lowest quintile show an increase in net worth of 5.9 percent, which stands in contrast to the information above which shows the median household in lowest quartile suffering a 100 percent decline in net worth. So there seems to be a noticeable gap between the lowest quintile, where some families maintained their net worth, and the lowest quartile, where declines were proportionally some of the most drastic.
The Fed will be posting more detailed information and figures by the end of the month, making it easier to analyze the data and perhaps pinpoint possible causes for the gap. It would be interesting to find out why the lowest income households fared better than those low-income families slightly above them. However, one question the survey itself cannot answer is how to help those in the bottom quartile protect their assets in future recessions.
