Are You Better Off Now Than You Were Five Years Ago?

Probably not:

Average American Family Income Declines

By MARTIN CRUTSINGER, AP Economics Writer
Thu Feb 23, 9:57 AM ET

WASHINGTON - The average income of American families, after adjusting for inflation, declined by 2.3 percent in 2004 compared to 2001 while their net worth rose but at a slower pace.

The Federal Reserve reported Thursday that the drop in inflation-adjusted incomes left the average family income at $70,700 in 2004. The median, or point where half the families earned more and half less, did rise slightly in 2004 after adjusting for inflation to $43,200, up 1.6 percent from the 2001 level.

The median, or midpoint for net worth rose by 1.5 percent to $93,100 from 2001 to 2004. That growth was far below the 10.3 percent gain in median net worth from 1998 to 2001, a period when the stock market reached record highs before starting to decline in early 2000.

The Fed's results were published in the 2004 Survey of Consumer Finances, a document which provides a comprehensive view of how Americans are faring on such pocketbook issues as incomes and net worth.

Loosely defined, "net worth" is the value of your assets: house, car, investments, and so on, after subtracting your indebtedness. I haven't seen the numbers underlying this study yet, but I can almost bet you that debt has far and away outstripped both income growth and the miniscule increase in net worth for the average American household. Most of that $93,000 is tied up in housing, I'm sure, and I'm also sure that net worth will plummet over the next five years.