The Federal Reserve data behind this conclusion reinforces something I've been writing about for several years now, as a relatively lone voice in the nation's press corps: Gen Xers have been decimated financially at a fragile time, while forming households and raising young families, those ordinary coming-of-age endeavors. Their massive loss of wealth occurred in "prime" earning years, when people squirrel away money to pay for bills down the road.
When, if ever, does this Lost Generation even start to catch up, considering the grim pace of economic recovery? Policymakers already are talking about cutting Social Security payments and other social safety-net benefits for Xers come retirement. This is a crisis in the making.
The Fed's findings compound earlier research showing that, for years, this group of Americans born between 1964 and 1980 (though the agreed-upon definition varies) has been doing worse than the generation that preceded them. Check out philly.com/GenX.
So it was profoundly unsettling to find, on Page 17 of the Fed's latest Survey of Consumer Finances, more proof of just how bad things are.
The Fed found that, for all age groups, median American family net worth in 2010 was $77,300 — the same as 1992 median family wealth adjusted for inflation. (Researchers defined net worth, or wealth, as the value of assets minus the value of debts. That includes mortgages, lines of credit, credit-card debt, vehicle loans, real estate, businesses, owned vehicles, financial assets, retirement accounts, stock, bank accounts, etc.)
Declining most precipitously was the wealth of families that in 2010 were headed by people ages 35 to 44, born between 1966 and 1975. Their median net worth was $42,100 in 2010. Nearly a decade earlier, in 2001, median net worth was $95,100 for families headed by someone 35 to 44 years old.
A 55.7 percent decline — by far the steepest of all age categories studied.
Taking the second-hardest hit, 28.5 percent, were those families in 2010 that were headed by someone 45 to 54 (loosely, young Baby Boomers). Their median wealth was $117,900, compared with $164,900 for families led by someone the same age nine years earlier.
Why were Gen Xers walloped so hard? Mainly, it seems, they had the grand misfortune of forming households just as corrupt financial markets were fueling an unprecedented surge in the price of houses.
From 1997 to 2006, home prices rose 7 percent on average each year. The century before that, prices rose only 1 percent a year on average.
Due to little more than the bad luck of birthdays, a higher proportion of Xers purchased homes while prices were exceptionally high. Families led by older Americans largely bought homes in higher numbers when prices were stable.
Among families who owned homes with mortgages, the burst of the housing bubble in late 2007 was devastating. Home equity decreased 42.3 percent between 2007 and 2010, the Fed says, dropping (in 2010 dollars) to $55,000 from $95,300.
Beyond housing, Xers also had much of their retirement savings invested in 401(k) and other plans hooked to the stock market, mostly buying when values were high and losing big through the last decade's booms and busts.
But the trouble is deeper.
A Pew Charitable Trusts study found that Gen X men born between 1964 and 1974 were earning 12 percent less in 2004 than their fathers were three decades earlier. Wage stagnation and a slowing U.S. economy were cited as factors.
And an April 2003 report on wealth and future income by the U.S. General Accounting Office found that Gen Xers had higher levels of debt than retirees that year had when they were younger. That was before housing tanked.
It's time we all acknowledge and then tackle this — before this Lost Generation and its children are thrown to the wolves.
Contact staff writer Maria Panaritis at 215-854-2431 or firstname.lastname@example.org or on Twitter @panaritism.