WASHINGTON: US households saw their wealth decline by more than a third between 2005 and 2010 as home values and share prices plummeted, leaving many with weak safety nets to weather a harsh economic environment.
The median household net worth dived 35 percent to $66,740 in the five year period, the Census Bureau said in a report on Monday. However, making comparisons with prior periods is difficult because of inflation adjustment issues.
"The overall decline in net worth reflects drops in housing values and stock market indices," said Census Bureau economist Alfred Gottschalck.
The median household net worth, which is the value of assets minus debt, was $102,844 in 2005, in 2010 constant dollars. However, the median household net work excluding home equity increased 8 percent to $15,000 between 2009 and 2010.
Federal Reserve data last week showed Americans suffered a record decline in wealth between 2007 and 2010, with median family net worth dropping 38 percent to $77,300.
That decline was blamed on house prices, which have dropped sharply from their 2005 peak.
Net worth provides a backstop for households during periods of economic uncertainty and family crisis. Declining wealth means that households have had little resources to draw on during the recession and the economy's lackluster recovery.
"If someone loses their job and they have high enough accumulated wealth they can use that to bridge the gap between losing their job and finding work again," Gottschalck told Reuters.
The recovery from the 2007-09 recession has been weak by historic standards, with the pace of economic growth insufficient to bring down unemployment.
The unemployment rate is currently at 8.2 percent and has been stuck above 8 percent since February 2009.
The Census Bureau's findings from the Survey of Income and Program Participation showed the decline in wealth between 2005 and 2010 was across all age groups.
However, the losses in absolute terms were deeper for older households than for younger ones. Householders 65 and older saw their median net worth falling to $170,128 from $195,890. The wealth of those under 35 decreased to $5,402 from $8,528.
Households between 35 to 44 years saw a 59 percent drop in median net worth to $33,200, the survey found.
All education groups suffered declines in wealth. The median income for households with a high school diploma fell 39 percent and dropped 32 percent for those with a bachelor's degree.
However, net worth remains high among households with more education. In 2010, households with a graduate or professional degree had a median net worth of $245,763, while the median net worth of those with a high school diploma only was $42,223, the survey found.
Households with a bachelor's degree had a median net worth of $142,518 during that period.