Survey Said...

March 5th, 2013

by Chris Turner

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


Every three years, the Federal Reserve Board conducts a Survey of Consumer Finances. Like most government enterprises, the data from 2010 became available mid-year 2012 (almost in time for the next survey in 2013). Although the FRB released their own PDF version with analysis (located here), sometimes providing readers their own set of graphs encourages them to come to their own conclusions.

Fortunately, tabulated data existed and only needed a bit of moving numbers here and there to create some fascinating charts. Typically, everyone starts with income, and the chart below shows that as a percentage change in income from 1987 to present, the bottom 20% actually increased the most. But, as we'll see, that doesn't say much.

True the bottom 20% edges out the top 10% for highest Percentage Mean (average) and Median Income Growth between the last 23 years. But, before celebrating the success of social programs, perhaps the next chart answers just how little the bottom 20% garners on a net worth basis.

The chart above reflects the net worth of individuals for each income bracket. For a further discussion regarding incomes, Doug Short does an exceptional job charting a historical perspective. Since the above chart depicts wealth, let's take a closer look at what each income bracket possesses as "wealth." The following chart gives a quick indication just which income percentile has benefited from the benevolence of the Federal Reserve and why the stock market needed to regain pre-financial crisis levels.

The chart above shows how much the stock value declined for those who had stocks from 2007 to 2010. With the S&P 500 near all time highs again, this value is a bit dated. To finish off this series of charts, we end with some really great news from the retirement account venue. How much has each income percentile saved in their retirement accounts?

As depressing as the bottom 90% retirement funds status might be, simply recognize that with rates near zero, the retirement accounts won't take long to deplete. Let's roll through some other saving mechanisms with transaction accounts up first.

Next would be the value each income percentile possessed regarding Certificates of Deposit.

The data indicates that the top 10% nearly triples the amount of the bottom 80% in CDs. But more drastically, as shown below, the top 10% nearly quintuples the bottom 90% in bond values.

The chart above indicates a great disparity in "savings" and accounts for a large portion of the following summation. The chart below indicate any financial asset by income percentile.

Clearly – the data shows that in just about every category, the top 10% garnered the highest gains for many areas from 1987 to present.

The good news is that in 2013, most all the indicators above have significantly increased, at least for the higher percentiles, but we won't be able to access that data until mid-2015 or so, given the timeliness of our government rate of productivity.

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