Federal Reserve

By Jay Pelosky

This op-ed originally appeared in Reuters and is based on the recent World Economic Roundtable Paper, "Building a Bridge to a Tri-Polar World Economy: An American Growth Strategy."

[Download the full paper here].

New data from the Federal Reserve confirms what many have long known: that vast numbers of Americans continue to lack the necessary savings to support a financially stable life. Household savings are much more robust in many other countries, thanks to long-standing efforts to make small-dollar savings institutions available to every citizen. In other leading nations (notably Germany, France, and Japan), basic banking is often performed at a surprising institution--the Post Office!

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include the monetary policy, economic inequality, and financial services.

 

Monetary Policy

This blog post is part one in a series analyzing the recently released Survey of Consumer Finances from the Federal Reserve. The SCF is a triennial survey of American families that offers insights into income, wealth, debt, and savings over time. Today’s post explores the importance of building precautionary savings and policy approaches to support families’ savings goals.

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include the Fed’s Survey of Consumer Finances for 2010, homeownership, and income inequality.

The Federal Reserve has released the most recent Survey of Consumer Finances (SCF) [pdf here] which covers 2007 through 2010 and presents additional evidence of the decline in both income and wealth during the recent recession. The report shows that American families’ median net worth fell from $126,400 in 2007 to $77,300 in 2010, representing a 40% drop.

SCF data support and are consistent with one of the key findings of our Assets Report Infographic. Data we relied on from Pew shows that between 2005 and 2009 black and Latino households saw disproportionate declines in their wealth, due in large part to the decline of their home values in the face of the housing crisis. This recent blogpost of ours looked at the role housing wealth plays in exacerbating the racial wealth gap.

Fans of the West Wing will fondly remember Rob Lowe’s character Sam Seaborn’s passionate diatribe against the penny, which this year our Canadian neighbors decided to get rid of. Author David Wolman, who recently sat down with the New American Foundation’s Global Assets Project for an interview, recently lived without cash for one year as research for his book “The End of Money,” which he initially thought would be a “eulogy meets valentine to banknotes and little metal plugs.”

Yesterday’s President’s Advisory Council on Financial Capability meeting sharpened the case for making financial capability building a top priority in the US.  Treasury Deputy Secretary Neal Wolin set the stage by stating that, “The economy is regaining momentum.  But we still have more work to do to repair the damage caused by the worst financial crisis in our lifetimes.”  A following panel disc

The U.S. Budget and Community WiFi are topics for discussion this week, as host Pamela Chan is joined by Preston Rhea and Jason Peuquet.