Consumer income has barely budged in this economic recovery, and savings have dwindled. Home ownership has soared along with housing prices, but so has debt.
The average family isn't getting rich: Median net worth (assets minus debt) from the recession year of 2001 through 2004 rose just 1.5% to $93,100, according to the Federal Reserve Board's comprehensive new Survey of Consumer Finances.
But a review of personal-finance findings from the Fed and other sources also shows that consumers are investing in their future. Half of U.S. households own stock; seven in 10 families own their home. A look at the state of consumer finance:
Saving and spending: Americans officially have been living beyond their income for one year. The nation's personal-saving rate --income minus consumption and interest payments -- turned negative in April 2005 for the first time since 1933, according to the Bureau of Economic Analysis.
The Fed survey found 56% of families are setting aside savings. It also asked consumers how long they typically plan for key saving and buying decisions. The richer households are, the longer the planning period. Families in the bottom 50 percentiles of wealth live in the short term: 45% of those families plan key money decisions a few months to a year out. Among the top 10 percentiles, more than 60% plan saving and consumption decisions at least five years out.
House money: Consumers can live beyond their income by drawing on savings and capital gains and by borrowing. Many are extracting cash from the house, taking out gains after a sale or borrowing on equity.
A cooling housing market means less easy money. One indicator of a peak: Census Bureau data show the percentage of households that owned homes reached an all-time record of 69.2% in late 2004. The decline since then has been small; 69% of families owned a home in late '05. But lack of growth (after 10 consecutive years of growth) suggests a limit to the percentage of households that want or can buy a home at current prices.
All houses aren't created equal. Homes owned by the top 1% were worth almost as much as homes owned by the bottom 50%. If you're selling goods for the home, it may pay to think rich.
Debt: Just under half of households (48%) had a home loan in 2004; 46% owed on credit cards or on installment loans such as car loans. About one-fourth of U.S. households (24%) were debt-free.
Stocks: In 1962, just 18% of families owned stock, according to the Fed. In 1983, 19% had stock or stock mutual funds. Advance to 2004, and half of households (49%) had money in the market. What happened?
A bull market, for one. The Dow added 300 points from 1962 to 1983 -- and 9,000 from 1983 to 2004.
The other key driver was the advent of employer-sponsored retirement plans such as 401(k)s. Nearly half of today's investors began by buying stock funds through such plans.
Stock-market values halved from '00 to '02 but came roaring back. What's remarkable is how inactive investors were during this roller-coaster ride.
In 1998, on the way up, 42% of stock or fund investors bought or sold shares, according to the Investment Company Institute and Securities Industry Association. In 2001, on the way down, and in 2004, on the way back up, 40% did some buying or selling. Maybe it's just as well that newspapers are ditching their stock pages, for consumers aren't that consumed with what they own.