Average household income

Mean, median and mode. Basic statistical definitions that every numerically literate person knows. A little more esoteric is the difference between a normal distribution and a poisson distribution. A normal distribution is the symetrical classic bell curve while a poisson distribution is skewed by realities like zero and non-zero real things.

I've been adding up the losses the American public have suffered and based on my understanding of middle-class America had previously argued that middle-class net worth was basically wiped out by the recent economic downturn. I calculated losses of about 14 trillion dollars and my understanding of the number of American households at about 100,000,000. Doing the math led me to conclude the average American household had lost $140,000 in the last year and so had a "negative net worth."

Imagine my surprise when I read that household net worth in America- while dropping another 2 trillion or so in the first quarter was still $50.4 trillion! (caveat- numbers from the Federal Reserve) Now do that math- the average (mean) American household still has a net worth of $504,000! How does that number match with your reality?

The answer of course is our intuitive understanding of average is absurd in this case. I suspect that the mode is $0, the median is less, perhaps much less, than $100,000 but a mean of $504,000. The minimum net work of the 359 billionaires in the US is $0.4 trillion. Probably another 10,000 or so with net worth over $100,000,000 sucking up another 10 trillion. About 2,000,000 millionaires account for another $2 trillion. Reality is probably another 5-10-fold higher for these fortunate folk. Instead of minimum net worth numbers accounting for about $13 trillion, probably more like $60-100 trillion! Leaving the net worth for the rest of us at -$10 trillion to -$40 trillion! Those are big negative numbers folks! That's a mean household net worth for the non-millionaires in America of ($100,000)-($400,000). That also probably doesn't match your reality.

In fact, the vast majority of the stock/equity losses were suffered by the >$1,000,000 folk. Most of the non-millionaires still have jobs so their cash flow hasn't changed a great deal. The housing debacle hasn't really come home to roost as most folk haven't tried to sell their homes since they dropped half their value. Most of us have just re-ordered the next 20 years of our lives toward more austerity, longer work lives, and more servicing the people who own the means of production. We continue to willingly trade our work lives for current need fulfillment and some relief at the end when we're old and sick! Sounds like a tenuous system to me.