Survey of Consumer Finances

Abstract

The Federal Reserve Board’s Survey of Consumer Finances for 2007 provides insights into changes in family income and net worth since the 2004 survey.1 The survey shows that, over the 2004–07 period, the median value of real (inflation-adjusted) family income before taxes was little changed; median income had grown slightly in the preceding three-year period (figure 1). Across most demographic groups, the pattern of change was mixed, but a few changes stand out: Income increased markedly for Hispanic or nonwhite families, while it declined substantially for families living in the Northeast or the Midwest and for families headed by a person who was retired or otherwise not working. In contrast to median income, mean income in the recent period climbed 8.5 percent, and the increases were spread broadly across demographic groups. The increases were most striking for families in the top 10 percent of the distribution of net worth and for families headed by a single parent, a person who was self-employed, or a person who was aged 65 to 74. Over the preceding three years, mean income had declined broadly. Differences in the rates of change in the median and mean signal a change in the distribution of income. Unlike family income over the 2004–07 period, both median and mean net worth increased; the median rose 17.7 percent, and the mean rose 13.0 percent (figure 2). The increases were fairly broadly spread, but with a number of noteworthy exceptions, some of which entailed changes in medians and means within demographic groups that differed substantially, either in terms of relative magnitude or in the direction of change. Median and mean net worth for the lowest 25 percent of the distribution of net worth plunged 36.8 percent and 43.8 percent, respectively; median net worth for the lowest 20 percent of the distribution of income fell 1.2 percent, but the mean rose 31.8 percent. Percentage increases in