I feel like such a downer lately. Here's some info from the Fed that shows that after inflation, the net worth of Americans fell for the first time since 2002.
Per Marketwatch:
The net worth of U.S. households fell by $533 billion, or a 3.6% annual rate, in the fourth quarter of 2007, the first time total wealth has fallen since late 2002, the Fed said. For all of 2007, household net worth rose 3.4% to $57.7 trillion, the slowest growth in five years. After the effects of 4.1% inflation are included, real net worth fell for the year.
There are some pretty big economic issues that have to be sorted out before growth can continue:
- Reduce spending and the budget deficits: Scale back the war in Iraq (whether right or wrong we can't afford it), decrease entitlements, increase the age of retirment from 65 to 70.
- Suffer through the mortgage bubble: There's no getting around this. The bubble is going to need to pop and the sooner the better. There will be pain but that's part of healing, unfortunately.
- Force banks to keep assets on balance sheet: A lot of the mortgage and debt problems arose because banks were able to shift assets and risk to others. It created an enormous market in which financial manipulation allowed banks to print money.
- Reduce dependence on foreign oil and energy. We're paying trillions for our oil (cost of oil, the war in Iraq, etc.). It's time we ended this dependence. It will be good for our economy and our national security. The next President needs to make this a key initiative. Of course, high oil prices will help this along.
This is just a start. But it will help to reverse the decline we've seen in our standard of living over the last eight years.
Comments
Tom Davis
March 08, 2008
I think suffering through the mortgage mess is probably #1. There was a lot of fun going up and now it's time to suffer through the ride down.
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Happy
March 08, 2008
I'm doing fine. Making more cash than ever. What is everyone complaining about?
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SyckLis
March 08, 2008
@Happy - i agree. my business is doing fine. it's online and i give away free stuff so any slowdown probably only helps. still, not sure what everyone is bitchin about.
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Ron Shays
March 13, 2008
Wealth has definitely decreased. My parents lived a comfortable life on one salary. Now, even two salaries can't make ends meet. Of course, there is horrible materialism. Everyone has to have three cars, five tvs, an enormous house. Is it making anyone happier? Not based on what I see. Just a lot more stressed out. But it seems to be human nature to want to outdo your neighbors or cousins. Material items to humans are like the feathers of a peacock.
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BankMan
May 07, 2008
People feel poorer with rising gas and food prices and low returns on their houses and investment. Whether they turn out poorer remains to be seen.
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