{"id":103274,"date":"2017-10-05T17:03:09","date_gmt":"2017-10-05T23:03:09","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/samuelson-how-resilient-is-the-typical-american-consumer\/"},"modified":"2017-10-05T17:03:09","modified_gmt":"2017-10-05T23:03:09","slug":"samuelson-how-resilient-is-the-typical-american-consumer","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/samuelson-how-resilient-is-the-typical-american-consumer\/","title":{"rendered":"Samuelson: How resilient is the typical American consumer?"},"content":{"rendered":"
\"Robert
Robert Samuelson<\/span>du1-i-syn<\/span><\/figcaption><\/figure>\n

On the other hand, if the consumer is confused and worried, the economy may be weak and vulnerable to setbacks. Which is it now? The answer matters for everyone.<\/p>\n

The latest reading comes from a massive survey conducted every three years by the Federal Reserve to describe Americans\u2019 finances. Three conclusions stand out from the newly released survey, two good and one not-so-good.<\/p>\n

The upbeat findings are that the economic recovery is finally reaching the poor and that Americans are reducing their debt burdens. The less hopeful trend is that the country\u2019s deep disparities of income and wealth have hardly changed.<\/p>\n

Let\u2019s take them one by one:<\/p>\n

It\u2019s hard to quarrel with success. From 2013 \u2013 when the last Fed study left off \u2013 to 2016, median family income rose 9.6 percent, from $48,100 to $52,700.<\/p>\n

By contrast, the previous study found that median family income had dropped 5 percent from 2010 to 2013. Presumably, this reflected the Great Recession\u2019s lingering adverse effects. (The median income is the income exactly in the middle \u2013 half are above, half below.)<\/p>\n

Not only were incomes up in the past three years, but gains were strong among minorities. Median incomes rose 10 percent for African-American families and 15 percent for Hispanics. (All changes are adjusted for inflation and expressed in 2016 dollars.)<\/p>\n

Generally, the Fed study parallels a recent Census Bureau report on household incomes and poverty. However, the Fed study has much more detail. It reports, for example, that half of American families have retirement accounts.<\/p>\n

It also has voluminous data on wealth: what people own and owe. The Census Bureau report has none. Trends in wealth mirrored trends in income. Although median net worth jumped 16 percent to $97,300, the proportionate gains for African-Americans (up 29 percent) and Hispanics (46 percent) were greater. (Net worth reflects people\u2019s assets, such as homes and stocks, minus their debts.)<\/p>\n

What is especially notable is that most American families have reduced their debt burdens, albeit gradually. The share of families who need to devote more than 40 percent of their income to paying interest and principal on their loans dropped from 11 percent in 2007 to 7 percent in 2016. Likewise, the median family with credit card balances, which are loans, carried 3 percent less than in 2013.<\/p>\n

All this suggests that the consumer is still in a position to propel the economy forward. Debt service isn\u2019t so great as to channel ever larger amounts of cash away from consumer spending. Jobs are plentiful, and the prices of homes (still owned by 64 percent of households) and stocks (52 percent) have recovered, engendering some optimism.<\/p>\n

So what\u2019s not to like? What do we learn from the Fed study, called the Survey of Consumer Finances, that might inspire caution?<\/p>\n

For starters, some recent gains simply recoup ground lost during the 2008-09 financial crisis and the Great Recession. It\u2019s true that median family income rose 10 percent from 2013 to 2016 to $52,700. But it\u2019s also true that it hasn\u2019t yet attained its previous peak of $55,000 in 2004.<\/p>\n

Similarly, despite recent gains, minorities lag well behind most whites economically.<\/p>\n

In 2016, white non-Hispanic families had median incomes of $61,200, much higher than median incomes for blacks ($35,400) and Hispanics ($38,500).<\/p>\n

Gaps in net worth are also huge: The median for whites was $171,000 in 2016 compared with $17,600 for blacks and $20,700 for Hispanics.<\/p>\n

The picture that emerges is frustratingly mixed. The recent gains are undeniable, and they seem to reflect the normal mechanics of recovery from deep recession more than any single act of policy.<\/p>\n

People overborrowed; they either defaulted or scrambled to repay. Firms struggled to rebuild cash reserves. Although these responses initially weakened the economy, they now seem to have restored confidence.<\/p>\n

Still, the confidence seems more wide than deep. It\u2019s hard to believe that most Americans have forgotten the Great Recession. Anything that reminds them of it \u2013 a slump in stock prices, much higher interest rates, some unforeseen economic setback \u2013 could unleash a self-fulfilling cycle of pessimism.<\/p>\n

There are limits to consumers\u2019 resilience.<\/p>\n

Robert Samuelson is a columnist for The Washington Post. \u00a9 2017 The Washington Post Writers Group<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Samuelsondu1-i-syn On the other hand, if the consumer is confused and worried, the economy may be weak and vulnerable to setbacks. Which is it now? The answer matters for everyone. The latest reading comes from a massive survey conducted every three years by the Federal Reserve to describe Americans\u2019 finances. Three conclusions stand out […]<\/p>\n","protected":false},"author":1,"featured_media":103275,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5758,6334],"tags":[125],"naviga_topic":[],"class_list":["post-103274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-columnists","category-columnists-guest-columns","tag-newsletter-opinion"],"acf":[],"author_name":"dh_admin","_links":{"self":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/103274","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/comments?post=103274"}],"version-history":[{"count":0,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/103274\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media\/103275"}],"wp:attachment":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media?parent=103274"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/categories?post=103274"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/tags?post=103274"},{"taxonomy":"naviga_topic","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/naviga_topic?post=103274"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}