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.
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.
This collapse is reflected in the
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
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.