According to the Survey of Consumer Finances, a study conducted every three years by the Fed, the average family in the lowest 25% income bracket holds around $47,000 in debt, down slightly from 2010 but up significantly from before the subprime financial crisis that wiped out a significant amount of assets held by the American lower middle class, particularly housing.
Big Mortgages, Small Stock Holdings
Total mortgage debt has increased 68% since 2007 for the poorest, with around $26,000 in outstanding mortgage debt per poor household. For most poor families, mortgage debt is significantly higher because many of the poorest Americans do not own any real estate whatsoever.
At the same time, the poorest were extremely unlikely to hold any investments at all. Of all Americans in the lowest 25% wealth bracket, only 1.6% of those surveyed held any equity investments. While stocks have rallied in recent years, with the S&P 500 more than doubling from the post-recession low and climbing 30% in 2013, most of America’s low income earners have seen no gains to their own net worth as a result.
While the poorest are unlikely to hold stocks, the average American is also unlikely to be in the stock market. Only 5.2% of Americans in the 25-49.9% wealth bracket said they held stocks, and only 11.4% of Americans in the 50-74.9% wealth bracket held stocks as well. That compares to half of the top 10% of wealthiest Americans, who said they own stocks.
All categories of Americans have less stock holdings than they did in the 2000s, as continued mistrust and skepticism of Wall Street has discouraged retail investors from participating in the equity market. In 2001, Americans in the lowest 25% wealth bracket were over three times more likely to hold shares than they are today.