Federal Reserve Survey Shows Family Finance Improvements

Between 2019 and 2022, the COVID-19 pandemic severely disrupted society and economic activity, said the Federal Reserve Bank in a release about its triennial Survey of Consumer Finances.

Nonetheless, the SCF reveals broad-based improvements in family finances, particularly with respect to net worth.

The Federal Reserve Board’s survey collects information about family income, net worth, balance sheet components, credit use and other financial outcomes.  The Federal Reserve has fielded the modern version of the interview survey every three years since 1989.

 

INCOME

 

Between the 2019 and 2022 surveys, real median family income (which is measured for the year before the survey) rose a relatively modest 3%, while real mean family income grew 15%.  Increases were experienced across the income distribution but were largest at the top.

Indeed, the growth in mean income was one of the largest three-year changes over the history of the modern SCF.

A relatively large share of families, 28%, reported their income during 2021 differed from its usual amount—that is, their “usual income”—reflecting elevated shares of families with higher-than-usual income and families with lower-than-usual income.

Increases in median and mean income were relatively widespread across different types of families, whether grouped by economic characteristics or demographic characteristics, and any declines were modest.  The exception was across educational groups, where increases in median and mean incomes were nearly fully concentrated among families in which the reference person had a college degree.

 

NET WORTH

 

Between 2019 and 2022, real median net worth surged 37%, and real mean net worth increased 23%, implying some narrowing of the wealth distribution between surveys.  In fact, the growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one.

Increases in median and mean net worth were near universal across different types of families, grouped by either economic or demographic characteristics.

 

ASSETS

 

Home ownership increased slightly, to 66.1%.  For families that owned a home, the median net housing value (the value of a home minus home-secured debt) rose from $139,100 in 2019 to $201,000 in 2022, as home values increased and housing debt was rather flat.

Net housing values grew substantially for families across the usual income distribution, reaching their highest levels on record, while housing affordability fell to historic lows, as the median home was worth more than 4.6 times the median family income.

Just over 66% of working-age families participated in retirement plans in 2022, up slightly from 2019.  While participation remained uneven across the income distribution, all major income groups saw increases.

Mean balances in account-type retirement plans rose for families in the upper half of the usual income distribution but fell for those in the bottom half.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $182.83 per cwt to $186.29, compared with last week’s range of $182.00 to $185.26 per cwt.  FOB dressed steers, and heifers went for $285.90 per cwt to $289.34, compared with $285.29 to $291.98.

The USDA choice cutout Wednesday was down $1.28 per cwt at $303.86 while select was down $0.28 at $278.35.  The choice/select spread narrowed to $25.51 from $26.51 with 138 loads of fabricated product and 35 loads of trimmings and grinds sold into the spot market.

The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.30 to $1.45 a bushel over the Dec corn contract, which settled at $4.92 a bushel, up $0.03.

No live cattle contracts were posted for delivery Wednesday.

The CME Feeder Cattle Index for the seven days ended Tuesday was $247.10 per cwt, up $0.27.  This compares with Wednesday’s Oct contract settlement of $247.12, down $1.67.