Nick Massey

As tempting as it is to talk about the stock market this week, I’m saving that for next time when we have more information. Instead, I think I’ll do some ranting and raving about a subject that affects most of us. Let’s talk about a recent report of income and wealth in America. It tells the story of how much the middle class has suffered since 2007.

Recently, the Federal Reserve released the 2013 Survey of Consumer Finances. This tri-annual survey is a valuable source of information that provides a snapshot into the financial life of the median American in inflation-adjusted 2013 dollars. Notice that I said “median” and not “average” … that’s important. I know. This is a lot of statistical talk, but please bear with me.

The average number can be skewed by a few people at the top or bottom of any measurement. The median gives us the point at which half the people are above and half the people are below, which is a much better indicator of what’s going on. Because the SCF has been conducted for decades, we can see how people have progressed, or regressed, over time.

For most people, if you are feeling less wealthy than you’re used to, it’s not your imagination. The changes during the past six years are consistently horrible, particularly for those in the middle income brackets. The SCF provides information on things like income and net worth for people based on several factors. These include: Age of Head of Household, Percentile of Income, Family Structure, Education of Head of Household, Race of Head of Household, Current Work Status of Respondent, Region, Urbanicity, Housing Status and Percentile of Net Worth.

Since 2007, median net worth has dropped almost any way you measure it. The only group that escaped a decline was the Current Work Status category called “other,” whose median net worth in 2007 was $6,000, and in 2013 was $9,000. I suspect most of you are not in that group. Yes, I know … the fat cats on Wall Street and corporate executives are raking in ridiculous sums of money, so there must be small pockets of people that have seen their fortunes rise in the past six years. But these groups are so small that they exist at the edges of society.

For the median person, the one in the exact middle in all of these categories except the one mentioned above, it’s nothing but losses. Looking at just one classification — net worth by percentile of income — the drop in median net worth from 2007 to 2013 is quite dramatic.

When we move over to the change in median income itself, the results are still miserable, though not as dramatic. Almost every group in every category suffered a decline in income over the past six years. The exceptions were households led by those older than 65 years old, households of retirees and those with net worth in the 90 percent to 100 percent range — the REALLY wealthy people. Again, breaking it out by percentile of income, there were losses in every group.

While the median at the bottom and the top of the food chain experienced little change in inflation-adjusted earnings during the past six years, those in the middle income and just below were hit hard.

Now, think of these two statistics together. For those who earn between the 40th and 59.9th percentile of earnings, meaning those right in the middle of wages in the U.S., income has fallen by 12 percent while their net worth has plummeted by 38 percent. And that’s over six years! This isn’t a one-year aberration, or some fluke in the data. This is six years.

So where is the economic recovery everyone keeps talking about? Where is the improving economy that is supposed to carry the U.S. through the second half of the decade? How are people supposed to not only grow their standard of living, but also put money away for their future?

Keep in mind that the inflation numbers used to adjust the data are the official Consumer Price Index figures. If we used more realistic numbers over those same six years, showing higher spending on medical expenses, education and food, the reports would be even worse. No wonder people are angry.

Whenever you read about the recovery gaining speed, or about consumers gearing up for higher spending, think about these numbers. Think about the millions of Americans who can’t even tread water financially, and have watched their situation deteriorate for more than five years. These are not high school dropouts, or even just high school graduates (only 35 percent of Americans have a college degree, so by definition 50 percent of earners must include many college grads).

Think about them when someone at the Fed, in Congress, in the Administration or at the New York Times crows about how they “saved” us. I’m not buying it. We still have a long way to go on our path toward economic recovery. Thanks for reading.

NICK MASSEY is a financial adviser and president of Householder Group Financial Advisors in Edmond. Massey can be reached at www.nickmassey.com. Investment advice offered through Householder Group Estate and Retirement Specialists, a registered investment adviser.