If you're looking for a little reassurance in an uncertain world, I'd like to suggest a slow, quiet reading of the most recent Federal Reserve report on our collective condition. The first report on what was learned in the 2001 Survey of Consumer Finances goes a long way toward explaining why our economy isn't weaker and why the mood of gloom and doom is worse than what most people are actually experiencing.

Here are a few highlights:

•   We're Not Awash in Debt.  In 1992 we collectively devoted 14.0 percent of our income to debt service. By 2001 it was down to 12.5 percent. That doesn't mean we owe less money. We owe more.  We simply have lower payments due to lower interest rates. While 10.8 percent of all families had monthly payments that took at least 40 percent of their income in 1992, the figure peaked in 1998 at 12.8 percent and declined to 11.0 percent in 2001. My bet is that it's still lower today.

•   Net Worth Rose, Bear Market Not Withstanding.  Median family net worth in 1992 was $61,300. By 2001 it was $86,100, an increase of 40 percent. The economists who did the report estimate that as of October, 2002--- what some say was the market low--- median net worth had declined to $80,700. That's still a 32 percent increase in ten years. Note that this is the median figure--- half of all households had a higher net worth, half had a lower net worth. The median isn't distorted by the very large gains and losses that occurred at the top 10 percent. If you take the long view, even the stock heavy top 10 percent haven't been devastated. In 1992 the median net worth in the top 10 percent households was $822,600. By 2001 it was $1,301,900. The economists estimate that figure was 11.9 percent lower in October 2002, or $1,146,974. That's still up 39 percent from 1992.

•   For Most Americans, The Stock Market (Still) Isn't A Big Deal. As I've pointed out many times, most Americans have more at stake in the used car market than they have at risk in the market for individual stocks. Households in the second quartile--- those between the median and top 25 percent--- owned a median $8,300 in individual stocks but owned nearly twice as much in automobiles, $15,300.  They owned about the same amount in mutual funds (of all kinds), about $15,000. Fortunately, it was a little different in retirement accounts. There, second quartile households had $30,000--- double their $15,300 in automobiles.

The median net worth may have grown only 32 percent but we've still had net improvement after the 25 percent inflation of the period. It could be a lot worse. If the mood is dark, I suspect part of the problem is that our expectations are so high.

How are you, personally, doing?

Better than you think, probably--- but it's hard to keep up with the Joneses. The table below, which indicates the median value of different assets held by quartile and the top 10 percent, should provide you with some clues. To be in the top 25 percent you'll need a $200,000 primary home, $19,000 in automobiles, $76,500 in retirement accounts, and a net worth around $430,200.

 
Who Had What In 2001: The Survey of Consumer Finances
All figures are in thousands and represent the median value in each percentile range.
  Net Worth Home Car(s) Retirement Funds Mutual funds Stock Bonds CDs Cash
Bottom Quartile 1.1 49.5 6.3 2.0 2.0 1.3 Na 1.5 0.7
Second Quartile 40.8 70.0 11.8 7.5 5.0 3.2 Na 5.0 2.2
Median 86.1 122.0 13.5 29.0 35.0 20.0 43.5 15.0 4.0
Third Quartile 156.1 120.0 15.3 30.0 15.0 8.3 Na 11.5 5.5
75-89.9 Ptile 430.2 200.0 19.0 76.5 37.5 25.6 20.0 20.0 13.7
Top 10 Percent 1301.9 350.0 28.8 190.0 140.0 122.0 40.0 40.0 36.0
Source: http://www.federalreserve.gov/pubs/bulletin/2003/0103lead.pdf
 

Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances