Is the American family holding its own financially, getting richer or becoming poorer?
At first glance it appears Americans are doing well. Median household income in 2024 was $84,000, a slight increase from 2023. Household savings average $8,000. And a record high 62% of households own stocks either directly or indirectly. That’s double the share ownership of European households.
That’s the good news.
The worrisome element is debt. Household debt averages $105,000 with mortgage payments accounting for 70% of that. Then there are car loans and credit card debt.
American households on average have over $10,000 in credit card debt. They also have auto loans totalling $13,000.
Added up, the average household is paying over $2,000 per month for rent or mortgage service. They’re paying from $500 to $700 on car loans and the typical minimum payment on credit card debt is about $110. So, in this example, monthly after-tax income is $2,800. That number is disposable household income – the amount remaining for everything else – food, clothing, childcare, transportation, entertainment.
The census bureau claims there are 132 million American households.
A household is people living in the same residence who share their finances.
Statistical variations are significant as income and expenses vary greatly by region, age, profession, and family size. The large number of very rich people further distorts data. By most accounts there are 1,000 billionaires and slightly more than six million millionaires in the US.
While statistics show that a majority of households have financial savings, 42% do not have enough savings to cover three months of expenses. Half of US households have no retirement savings and 67% of respondents in opinion surveys say they live paycheck to paycheck.
Underwater
Ten percent of households have negative net worth, meaning they’re underwater, with debts exceeding assets.
Mike D. in suburban Washington disclosed the financial situation of his American family. Mike is 55 and has been a personal trainer for ten years. He has a bachelor’s degree in kinesiology from the University of Maryland. His wife Preeti is 50 with an MBA from Louisiana Tech. She is a stay-at-home mom with their seven-year-old son.
The family earned $60,000 in 2024 and received a $5,000 tax refund. There was income from stock market investments of $52,000 and they have $19,000 of emergency cash. Their credit card debt is $16,000 and they have student loans of $12,000. These two debts are not being serviced at the moment.
The family’s living expenses total $3,000 a month with the biggest item being $1,670 for rent. Their monthly income is $5,416.
Mike’s household is middle class, but the American middle class is shrinking and has been for five decades. The Pew Charitable Trust finds that in 1971 61% of households were middle class while in 2023 that number was down to 51%. Pew defines middle class as household incomes ranging from $55,000 to $168,000.
There is a widening gap between rich and poor. The top 10% of Americans account for 67% of total wealth while the bottom 50% accounts for less than 3%. Income inequality in the US is greater than in any other advanced, high-income country.
Richest
In the Silicon Valley near San Francisco, home to the richest technology entrepreneurs, the wealth gap is even greater. A study from San Jose State University finds that nine households account for 62% of the region’s net worth. These nine households have more wealth than the bottom 440,000 households combined. One-third of Silicon Valley households report not having enough income to cover basic needs.
Wealth disparity has become a big issue in China. Forbes Magazine says there are 500 billionaires in China and the gap between rich and poor is nearly as wide as in the United States.
The Federal Reserve at the beginning of 2025 issued a report on the financial well-being of Americans. Its survey finds that 73% of adults said they were “doing OK” or living comfortably. The top financial concern was inflation, particularly the price of food and groceries.
The survey notes significant differences by age, education, race and ethnicity. For example, 82% of Asian adults were doing OK followed by 77% of whites, 65% of blacks and 63% of Hispanics.
Is the American family doing well? Overall, with considerable caveats, the answer is yes.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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