Yesterday Business Week posted an article about what has happened to the wealth of the average American family since 1989.

The article reports on median family net worth:

1989: $79,600
1992: $75,400
1995: $81,200
1998: $95,500
2001: $106,100
2004: $107,200
2007: $126,400
2010: $77,300

As you can see, family net worth was climbing pretty steadily until 2007. Part of the reason for the drop is the housing bubble. That bubble was the result of the Congressional plan to enable all Americans to buy houses whether they could afford to pay off the mortgage or not. A lot of that had to do with Fannie Mae and Freddie Mac and their collapse, but even then, these numbers are disturbing.;

The article concludes:

The Fed changed its methodology for the survey starting in 1989, so it doesn’t compare current numbers with pre-1989 ones. At the risk of comparing apples and oranges, I went ahead and did the calculations for two earlier surveys—in 1962 and in 1983. In 1962, median net worth (in 2010 dollars) was $54,200. In 1983, it was $88,000.

If those numbers are correct, then median family net worth rose 62 percent from 1962 to 1983, then fell 12 percent from 1983 to 2010. Since the methodology of the survey changed, those numbers are almost certainly off, but there’s no way for an outsider to tell how much—or even in which direction. Still, if they’re anywhere close to reality, it’s more evidence of how the American economy has failed to generate rising living standards for most people in recent decades.

At the same time the net worth of families was declining, the cost of living has gone up–gasoline is double what it was five years ago, food prices have gone up, our tax burdens have increased, etc. Some of us are still paying real estate taxes on the value of our houses before the housing bubble burst. It really is time to elect people who understand the economy–the things we are currently doing are not working.