Thursday, March 02, 2006

The Net Wealth Bubble

Interesting figures, this Federal Reserve Survey of Consumer Finances. Seems like there's an increase of median net wealth all around, and mostly in the upper levels, but less than in the last two surveys. Debt is rising in certain groups. The wealthiest are getting richer faster. (And that's not counting the Forbes 400.) 70% of the net $50 trillion of wealth is in the hands of the top 10%, according to the Wall Street Journal. Only 2.5% of the wealth is in the hands of the 56 million families in the bottom half of the pyramid.

It seems that a lot of the increase in net worth is due to increased real estate values. The report is unclear as to how and when researchers calculated home value figures, which have been changing on almost a daily basis over the last three or four years.

Also, these surveys seem to be based on verbal interviews. How many of you reading these words have actually answered a verbal or written survey of this nature? I know I haven't. Some research should be done to see just who is and is not responding to these surveys, and how truthfully. Don't we have to evaluate the value of the evaluation? Don't want to rely on faulty scaffolding to jump to unwarranted conclusions.


[Thanks to the safetyandlosscontrolassoc.com for the picture.]

Read the Fed's summary under "Features" in the right-hand column at the Fed website.

For a quick look at some of the figures, see an article in the Wall Street Journal at this link.

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