Fox's Varney Buries Economic Facts To Attack Obama's RecordOctober 3, 2012 11:30 AM EDT ››› REMINGTON SHEPARD
Fox's Varney Misleadingly Blames Obama For Declines in Middle Class Income And Net Worth
Fox's Varney: Decline In Middle Class Income And Net Worth Largely The Result Of "President Obama's Failed Policies." During Fox & Friends, Stuart Varney commented on recent remarks made by Vice President Joe Biden regarding the condition of the middle class over the last four years, blaming Obama policies for the contraction of middle class income and net worth. From the broadcast:
VARNEY: It is a matter of opinion who buried the middle class over the four years. It is a matter of fact that the middle class has been buried over the last four years. You look at the objective facts here; income down 4,000 for the average middle American family, down $4,000 a year in four years. And then you have personal wealth destroyed by a 30 percent drop in housing prices, largely over the last four years. And what about the American dream, the aspirations of Middle America? More people now think that the future is darker for their children than it is brighter for their children. I would argue that the middle class has indeed been buried over the last four years, and that was a gaffe, a big gaffe by Vice President Biden to go out there and admit it and give the Republicans fodder for tonight's debate.
VARNEY: Look, there is going to be a debate about this tonight. Who buried the middle class? Is it President Obama's policies, or does it go back to the Bush administration and their policies? I've got an opinion, which says it is largely President Obama's failed policies that have produced this mess for the middle class. But it will be debated tonight. That's going to be out there. [Fox News, Fox & Friends, 10/3/12]
In Fact, Middle Class Income Has Declined Over the Last Decade, Not Just The Last Four Years...
CBPP: Drop In Household Income "Continues A Decade-Long Downward Trend." In a September 17 report the Center on Budget and Policy Priorities (CBPP) found that the recent decline in median household income is part of a decade-long trend. From the report:
Median household income -- the income of the household in the middle of the U.S. income distributed ranked by income -- fell to $50,054 in 2011, down $777 from the year before, after adjusting for inflation.
Particularly for working-age households, median income is largely a function of labor market opportunities, mainly wage rates and hours of work. In the slowly recovering economy, employment remained fairly flat in 2011 as a share of the working-age population, while the average number of hours worked per week edged up slightly. Real hourly wages, however, edged down by 1 percent. For working-age households, those headed by someone younger than 65, median income fell $1,210 in 2011, or 2.1 percent, to $55,640.
Since the recession started in 2007, median income for working-age households has fallen by 9.3 percent, after adjusting for inflation. This continues a decade-long downward trend. Median income for this group has declined in eight of the last ten years, falling from $63,517 in 2000 (in 2011 dollars) to $61,336 in 2007 and to $55,640 in 2011, a cumulative loss of 12.4 percent or $7,877 since 2000. (See box on decade-long trends.)
The drop in median household income was tied to a substantial rise in income inequality. Household incomes fell in the middle and rose at the top, as income gains from the economic recovery were very unevenly shared. For the 20 percent of households in the middle, average household income fell 1.7 percent, or $876. For the top 20 percent, average income rose 1.9 percent, or $3,286. For the top 5 percent of households, average income rose 5.1 percent, or $15,184.
With the gains from economic growth going disproportionately to those at the top of the income scale, the share of the national income that goes to households in the middle and bottom has fallen. [Center on Budget and Policy Priorities, 9/17/12, emphasis added]
EPI: Median Income Fell More Than 10 Percent From 2000-10. In a September 14, 2011 report, the Economic Policy Institute (EPI), like the CBPP, found that median household income has declined over the last decade:
Between 2000 and 2010, median income for working-age households fell from $61,574 to $55,276, a decline of roughly $6,300, which is more than 10 percent. [Economic Policy Institute, 9/14/11]
U.S. Census Bureau: Median Income Has Trended Downward For More Than A Decade. Data from the U.S. Census Bureau indicates that Median household income has trended downward since 1999:
[U.S. Census Bureau, accessed 10/3/12]
The Downward Trend In Net Worth And Home Values Also Pre-Dates The Obama Administration
Federal Reserve: "Median Net Worth Fell 38.8 Percent ... Between 2007 And 2010." In its June 12 bulletin, the Federal Reserve explained that median net worth declined by 38.8 percent between 2007 and 2010. From the bulletin:
The Federal Reserve Board's Survey of Consumer Finances (SCF) for 2010 provides insights into changes in family income and net worth since the 2007 survey.1 The survey shows that, over the 2007-10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent; median income had also fallen slightly in the preceding three-year period (figure 1).
The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent (figure 2).Median net worth fell for most groups between 2007 and 2010, and the decline in the median was almost always larger than the decline in the mean. The exceptions to this pattern in the medians and means are seen in the highest 10 percent of the distributions of income and net worth, where changes in the median were relatively muted. Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices. [Federal Reserve Bulletin, June 2012]
WSJ: Median Net Worth Has Declined Mostly Because Of The Decline In Home Values. In a June 11 post on its Real Time Economics blog, The Wall Street Journal reported that most of the drop in net worth "was driven by the housing market's collapse." From the article:
Median net worth of families fell to $77,300 in 2010 from $126,400 in 2007, a drop of 38.8%-the largest drop since the current survey began in 1989, Fed economists said Monday. Net worth represents the difference between a family's gross assets and its liabilities. Average net worth fell 14.7% during the same three-year period.
Much of that drop was driven by the housing market's collapse. Families whose assets were tied up more in housing saw their net worth decline by more. Among families that owned homes, their median home equity declined to $75,000 in 2010, down from $110,000 three years earlier. [The Wall Street Journal, Real Time Economics, 6/11/12]
WSJ: After Years Of Decline, Home Values Are Recovering. In a September 20 article, The Wall Street Journal reported that after years of decline, home values have begun to increase. In fact, in the second quarter of 2012, home values hit their highest value since 2008. From the article:
A strengthened housing market is lifting property values and helping Americans repair their balance sheets, a trend that could spur the economy by making households more willing to spend.
The value of Americans' real-estate holdings jumped about $400 billion, or 2.1%, to $19.1 trillion, in the second quarter, the Federal Reserve said Thursday, the highest level since the final three months of 2008. The increase follows a similar leap in the first quarter and raises the amount of equity that owners have in their homes to a high since the third quarter of 2008.
Since the recession, sliding property prices have made Americans feel less wealthy and less willing to spend on everything from home renovations and appliances to restaurant meals. That weighs on the recovery, because consumer spending fuels two-thirds of the nation's economic activity. With real-estate values now rising--and housing chalking up more gains recently in sales and construction--Americans are seeing their critical assets rise in value as their disposable incomes also climb. That helps in rebuilding wealth and makes even heavier debts more manageable. [The Wall Street Journal, 9/20/12]