92 Fed. Res. Bull. A1 (2006)

handle is hein.journals/fedred92 and id is 1 raw text is: Recent Changes in U.S. Family Finances:
Evidence from the 2001 and 2004 Survey
of Consumer Finances

Brian K. Bucks, Arthur B. Kennickell, and Kevin B.
Moore, of the Board's Division of Research and
Statistics, prepared this article with assistance from
Gerhard Fries and A. Michael Neal.
The Federal Reserve Board's Survey of Consumer
Finances for 2004 provides insights into changes in
family income and net worth since the 2001 survey.
The survey shows that, over the 2001 04 period, the
median value of real (inflation-adjusted) family
income before taxes continued to trend up, rising
1.6 percent, whereas the mean value fell 2.3 percent.
Patterns of change were mixed across demographic
groups. These results stand in contrast to the strong
and broad gains seen for the period between the 1998
and 2001 surveys and to the smaller but similarly
broad gains between the 1995 and 1998 surveys
(figure 1).
Much like median income, median real family net
worth in the 2001 04 period increased 1.5 percent,
but mean net worth rose 6.3 percent. The increase in
wealth appears to have been clearest in the middle
income group. Over many other demographic groups,
the data show a complex pattern of mixed increases
i.   b W,   i  r~idla1  . pd  ' '    ,.   .- o  .    P ....-t

~ Mean


SOURCE: Federal Reserve Board, Survey of Consumer Finances.

and decreases in wealth; in some instances, median
and mean values moved in opposite directions, a
pattern that signals distributional changes within
groups. In contrast, the growth in wealth between the
1998 and 2001 surveys and between the 1995 and
1998 surveys was stronger both in the mean and in
the median, and the growth was shared by most
demographic groups (figure 2).
Three key shifts in the 2001 04 period underlie the
changes in net worth. First, the strong appreciation of
house values and a rise in the rate of homeownership
produced a substantial gain in the value of holdings
of residential real estate. Second, despite the general
recovery of prices in equity markets since 2001, the
direct and indirect ownership of stocks declined, as
did the typical amount held. Third, the amount of
debt relative to total assets increased markedly, and
the largest part of that increase was attributable to
debt secured by real estate.
As debt rose over the period, families devoted
more of their incomes to servicing their debts, despite
a general decline in interest rates. Also, the fraction
of families with large required debt service payments
relative to their incomes rose a small amount, and the

SOURCE: Federal Reserve Board, Survey of Consumer Finances.

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