Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
3Activity
0 of .
Results for:
No results containing your search query
P. 1
Fed Report Consumer Finances

Fed Report Consumer Finances

Ratings: (0)|Views: 1,022 |Likes:
Published by Foreclosure Fraud
4closureFraud.org
4closureFraud.org

More info:

Categories:Types, Research, Law
Published by: Foreclosure Fraud on Jun 11, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

06/11/2012

pdf

text

original

 
June 2012 Vol 98, No 2
Changes in U.S. Family Finances from 2007 to2010: Evidence from the Survey of ConsumerFinances
Jesse Bricker, Arthur B. Kennickell, Kevin B. Moore, and John Sabelhaus, of the Board'sDivision of Research and Statistics, prepared this article with assistance from Samuel Ackerman, Robert Argento, Gerhard Fries, and Richard A. Windle.
The Federal Reserve Board’s Survey of Consumer Finances (SCF) for 2010 providesinsights into changes in family income and net worth since the 2007 survey.
1
The surveyshows that, over the 2007–10 period, the median value of real (inflation-adjusted) familyincome before taxes fell 7.7 percent; median income had also fallen slightly in the precedingthree-year period(
). The decline in median income was widespread across demo-graphic groups, with only a few groups experiencing stable or rising incomes. Most notice-ably, median incomes moved higher for retirees and other nonworking families. The declinein median income was most pronounced among more highly educated families, familiesheaded by persons aged less than 55, and families living in the South and West regions.Real mean income fell even more than median income in the recent period, by 11.1 percentacross all families. The decline in mean income was even more widespread than the declinein median income, with virtually all demographic groups experiencing a decline between2007 and 2010; the decline in the mean was most pronounced in the top 10 percent of theincome distribution and for higher education or wealth groups. Over the preceding threeyears, mean income had risen, especially for high-net-worth families and families headed bya person who was self-employed.The decreases in family income over the 2007
−10 period were substantially smaller than thedeclines in both median and mean net worth; overall, median net worth fell 38.8 percent,and the mean fell 14.7 percent (
). Median net worth fell for most groups between2007 and 2010, and the decline in the median was almost always larger than the decline inthe mean. The exceptions to this pattern in the medians and means are seen in the high
-est 10 percent of the distributions of income and net worth, where changes in the medianwere relatively muted. Although declines in the values of financial assets or business wereimportant factors for some families, the decreases in median net worth appear to have beendriven most strongly by a broad collapse in house prices.
2
This collapse is reflected in the
1
For a detailed discussion of the 2004 and 2007 surveys as well as references to earlier surveys, see Brian K.Bucks, Arthur B. Kennickell, Traci L. Mach, and Kevin B. Moore (2009), “Changes in U.S. Family Financesfrom 2004 to 2007: Evidence from the Survey of Consumer Finances,”
Federal Reserve Bulletin
, vol. 95, pp.A1–A55,www.federalreserve.gov/pubs/bulletin/default.htm.Information about changes in family finances between 2007 and 2009 based on a re-interview of 2007 SCF families can be found in Jesse Bricker, BrianBucks, Arthur Kennickell, Traci Mach, and Kevin Moore (2011), “Surveying the Aftermath of the Storm:Changes in Family Finances from 2007 to 2009,” Finance and Economics Discussion Series 2011-17 (Washing-ton: Board of Governors of the Federal Reserve System, March),www.federalreserve.gov/pubs/feds/2011/201117/index.html
2
If primary residences and the associated mortgage debt are excluded, the median of families’ net worth isreduced from $126,400 to $42,300 in 2007 and from $77,300 to $29,800 in 2010. Although the adjusted wealthmeasure declined proportionately by only a somewhat smaller amount than the unadjusted measure—29.7 per-cent—the amount of the change is, obviously, much smaller; median adjusted wealth declined $12,600, whilethe unadjusted measure fell $49,100.
 
patterns of change in net worthacross demographic groups tovarying degrees, depending on therate of homeownership and theproportion of assets investedin housing. The decline in mediannet worth was especially large forfamilies in groups where housingwas a larger share of assets, such asfamilies headed by someone 35 to44 years old (median net worth fell54.4 percent) and families in theWest region (median net worth fell55.3 percent).A substantial part of the declinesobserved in net worth over the2007–10 period can be associatedwith decreases in the level of unre-alized capital gains on families’assets. The share of total assets of all families attributable to unrealized capital gains from real estate, businesses, stocks, ormutual funds fell 11.6 percentage points, to 24.5 percent in 2010. Although the overall levelof debt owed by families was basically unchanged, debt as a percentage of assets rosebecause the value of the underlying assets (especially housing) decreased faster.With overall median and mean debt basically unchanged or falling less than income, meas-ures of debt payments relative to income might have been expected to increase. In fact,total payments relative to total income increased only slightly, and the median of paymentsrelative to income among families with debt fell after having risen between 2004 and 2007.The share of families with highpayments relative to their incomesalso fell after rising substantiallybetween 2001 and 2007.This article reviews these and otherchanges in the financial conditionof U.S. families between 2007 and2010.
3
The discussion draws ondata from the Federal ReserveBoard’s SCF for those years; it alsouses evidence from other years of the survey and a special panel SCFconducted from 2007 to 2009 toplace the 2007–10 changes in abroader context.
3
Seebox 1, “The Data Used in This Article,” for a general description of the data. The appendix to this articleprovides a summary of key technical aspects of the survey. See also Bucks, Kennickell, Mach, and Moore,“Changes in U.S. Family Finances from 2004 to 2007,” and Bricker, Bucks, Kennickell, Mach, and Moore,“Surveying the Aftermath of the Storm.”
Figure 1. Change in median and mean incomes,2001–10 SCF
MedianMean10.05.0.0–5.0–10.0–15.0200104 200407 200710
Note: Changes are based on inflation-adjusted dollars.Source: Federal Reserve Board, Survey of Consumer Finances.
Figure 2. Change in median and mean net worth,2001–10 SCF
200104 200407 200710MedianMean10.0.0–10.030.020.0–20.0–30.0–40.0–50.0
Note: Changes are based on inflation-adjusted dollars.Source: Federal Reserve Board, Survey of Consumer Finances.
2 Federal Reserve Bulletin | June 2012
 
Box 1. The Data Used in This Article
Data from the Survey of Consumer Finances (SCF) are the basis of the analysis presentedin this article. The SCF is normally a triennial interview survey of U.S. families sponsored bythe Board of Governors of the Federal Reserve System with the cooperation of the U.S.Department of the Treasury. Since 1992, data for the SCF have been collected by NORC, aresearch organization at the University of Chicago, roughly between May and December ofeach survey year.The majority of statistics included in this article are related to characteristics of “families.” As used here, this term is more comparable with the U.S. Census Bureau definition of“households” than with its use of “families,” which excludes the possibility of one-personfamilies. The appendix provides full definitions of “family” for the SCF and the associatedfamily “head.” The survey collects information on families’ total income before taxes for thecalendar year preceding the survey. But the bulk of the data cover the status of families asof the time of the interview, including detailed information on their balance sheets and useof financial services as well as on their pensions, labor force participation, and demo-graphic characteristics. Except in a small number of instances (see the appendix and thetext for details), the survey questionnaire has changed in only minor ways relevant to thisarticle since 1989, and every effort has been made to ensure the maximum degree of com-parability of the data over time.The need to measure financial characteristics imposes special requirements on the sampledesign for the survey. The SCF is expected to provide reliable information both on attri-butes that are broadly distributed in the population (such as homeownership) and on thosethat are highly concentrated in a relatively small part of the population (such as closely heldbusinesses). To address this requirement, the SCF employs a sample design, essentiallyunchanged since 1989, consisting of two parts: a standard, geographically based randomsample and a special oversample of relatively wealthy families. Weights are used to com-bine information from the two samples to make estimates for the full population. In the2010 survey, 6,492 families were interviewed, and in the 2007 survey, 4,421 wereinterviewed.This article draws principally upon the final data from the 2010 and 2007 surveys. To pro-vide a larger context, some information is also included from the final versions of earliersurveys, as well as a panel interview in 2009 with respondents to the 2007 survey.
1
Differ-ences between estimates from earlier surveys as reported here and as reported in earlier
Federal Reserve Bulletin
articles are attributable to additional statistical processing, correc-tion of minor data errors, revisions to the survey weights, conceptual changes in the defini-tions of variables used in the articles, and adjustments for inflation. In this article, all dollaramounts from the SCF are adjusted to 2010 dollars using the “current methods” version ofthe consumer price index for all urban consumers (CPI-U-RS). The appendix providesadditional detail on the adjustments.The principal detailed tables describing asset and debt holdings focus on the percentageof various groups that have such items and the median holding for those who have them.
2
This conditional median is chosen to give a sense of the “typical” holding. Generally, whenone deals with data that exhibit very large values for a relatively small part of the popula-tion—as is the case for many of the items considered in this article—estimates of themedian are often statistically less sensitive to such outliers than are estimates of the mean.One liability of using the median as a descriptive device is that medians are not additive;that is, the sum of the medians of two items for the same population is not generally equalto the median of the sum (for example, median assets less median liabilities does not equalmedian net worth). In contrast, means for a common population are additive. Where acomparable median and mean are given, the gain or loss of the mean relative to themedian may usually be taken as indicative of the relative change at the top of the distribu-tion; for example, when the mean decreases more rapidly than the median, it is typicallytaken to indicate that the values in the top of the distribution fell more than those in thelower part of the distribution.
continued on next page
Changes in U.S. Family Finances from 2007 to 2010 3

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->