Financial News

Americans wake up to the end of the dream

The American Dream is a financial nightmare for many middle class families in the US who have seen their personal net worth plunge by 40% since the downturn.

In just 36 months, the typical family has seen their wealth drop from $126,400 to $77,300, according to figures from the US Federal Reserve.

Most of the loss is blamed on falling house prices, which seem to be bottoming out after years languishing in the doldrums.

One of the conundrums turned up by the statistics is the fact personal wealth has dropped back to levels last seen in the early 1990s rather than stick at a higher level.

The Fed says that in that horrific 36 months, households have seen their savings and incomes shrink.

Average earnings are around $46,000 a year rather than $50,000 a year seen in 2010.

However, although finances have been tough for lower and middle earners, the rich have seemingly continued to get richer.

With the wealthiest 10% of households their net worth increasing their net worth from $1.17 million to $1.19 million.

The number of families manage to save money has slipped back from 56.4% in 2007 to 52% in 2010, but the research found total savings have increased, hinting fewer families are saving more money, while a most manage to save nothing even for a deposit on a home or for retirement.

Debt is still weighing down US households, with 75% confessing they owe money and the figures changing little over the years of the survey.

Falling incomes, the rising cost of living and unemployment have combined to stop households saving, but low interest rates have helped many keep their heads above water.

Debt has switched focus as well – with the amount of credit card debt falling by 6.7% to 39.4%, with a median balance fell 16.1% down at $2,600.

Borrowers are also carrying less cards, with a third of families not holding any no cards (32%), up from 27% in 2007.

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