A long, steep drop for Americans' standard of living
Not since at least 1960 has the US standard of living fallen so fast for so long. The average American has $1,315 less in annual disposable income now than at the onset of the Great Recession.
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When he had the job, he made a comfortable income. Now his income is sporadic, from the occasional construction job he lands. He used to buy clothing from Macy's or other department stores. Now he goes to Goodwill or Salvation Army stores. He has even cut back on taking the city subways, instead riding his bicycle. Separated from his wife and his 15-year-old daughter, he says, "Try making child support payments when you don't have a regular income. I'm constantly catching up."Skip to next paragraph
Even recently some Americans could tap the equity in their homes or their stock market accounts to make up for any shortfalls in income. Not anymore. Since 2007, Americans' collective net worth has fallen about $5.5 trillion, or more than 8.6 percent, according to the Federal Reserve.
The bulk of that decline is in real estate, which has lost $4.7 trillion in value, or 22 percent, since 2007. In Arizona, for example, more than half of homeowners live in houses that are worth less than their purchase prices, according to some reports.
Stock investments aren't any better. Since 1999, the Standard & Poor's index, on a price basis, is off 17 percent. It's up 3.2 percent when dividends are included, but that's a small return for that length of time.
"This is really a lost decade of affluence," says Sam Stovall, chief investment strategist at Standard & Poor's in New York.
Among those who have watched their finances deteriorate are senior citizens.
"Given the stock market, they are very nervous," says Nancy LeaMond, executive vice president at AARP, the seniors' lobbying group. "They want to keep their savings."
But Ms. LeaMond also notes that about 2 in every 3 seniors are dependent not on Wall Street but on Social Security. The average annual income for those over 65 is $18,500 a year – almost all of it from Social Security, she says. "This is not a part of America that is rich," she says.
At the same time, seniors are getting pinched in their pocketbooks.
"Our members are watching all the things they have to buy, especially health-care products, go up in price," says LeaMond.
In Pompano, Fla., some stretched seniors end up at the Blessings Food Pantry, which is associated with Christ Church United Methodist.
"We have quite a few grandparents who are raising their grandchildren on a fixed income, feeding them and buying clothes for them when they can't afford to do [that for] themselves," says Yvonne Womack, the team leader.
Others, she says, are forgoing food to pay for their medical prescriptions. "And then there is your ordinary senior whose Social Security [check] has not gone up in the last several years, but food and gasoline [prices] have skyrocketed," she says. (However, Social Security checks will go up 3.6 percent in January.) The Blessings, she notes, is now feeding 42 percent more people than last year. "We also provide food you can eat out of a can," she says. "We do have seniors who are living on the streets."
Researcher Geoff Johnson contributed to this report.
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