Two recent surveys released by the U.S. Census Bureau and the Federal Reserve confirm that family net worth has taken a dramatic downturn in the recent recession. The survey’s findings shine a harsh light on the devastation inflicted by the reckless behavior of the financial industry in its manipulation of the housing market, and also explain why the country and families are struggling to recover.

The U.S. Census Bureau shows Gen X suffered greatest loss

According to the U.S. census report released on June 18, the annual Survey of Income and Program Participation, which takes a detailed look at the financial situation of all Americans, the median net worth decreased for all age groups between 2005 and 2010. (Net worth is the value of assets minus debt.) Those in the Gen X age group , now in who are now in their mid 40s to mid 50s, took the biggest hit in the economic downturn

For households in the 45 to 54 year old range, median net worth declined by $54,881 to $90, 434, or a 38 percent drop from 2005 to 2010, adjusted for 2010 dollars. For the entire population, the median household income declined by 35 percent, or $66, 740. According to Census Bureau economist Alfred Gottschalck, the overall decline in net worth is due to a decline in housing values and stock market losses.

A Federal Reserve survey shows record drop in net worth

Americans suffered a gut-wrenching decline in wealth between 2007 and 2010, according to the Federal Reserve Survey of Consumer Finances released on June 11. The Federal Reserve conducts the Survey of Consumer Finances every three years, so the latest numbers compare family finances in 2007 and 2010. The Fed reported a bigger drop in net worth than the Census Bureau, putting it at 38.8 during the three-year period. According to Fed economists, this was the biggest drop in net worth since 1989, when they began the survey.

According to the Fed survey, the median net worth plunged to $77,300 in 2010 from $126,400 in 2007. The 2010 levels were similar to those in 1992. Like the economists at the Census Bureau, the Fed economists blamed the decline on “a broad collapse in housing prices.”

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What’s that huge hole in the ground in downtown Chicago? It was supposed to have been a residential skyscraper–the Chicago Spire–and it could have been the second-highest building in the world, but the project crashed when the global economy did the same. [During a recent architectural tour of Chicago, one docent shed exactly zero tears over  the Spire’s demise, calling the idea behind it “architectural grandstanding.”]

At Web Urbanist , you can scroll through a portfolio of 12 super high-rise projects around the world that—literally—never got off the ground because of the recession.  The portfolio offers a stark contrast between the vision, via architctural renderings, and the reality–abandoned constructon sites and less-than-half-completed structures.

Some of them would have been spectacular achievements of creative architecture. The people who designed them and financed them dreamed big and lost big, too.

Maybe these projects are object lessons in the perils of excess and financial overreach. Perhaps they’re a good starting point for a discussion about the relationship between money and imagination. Either way, they’re definitely fun to look at.

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Who is Nouriel Roubini, and why should you care about what he says? First his credentials: He is the cofounder and chairman of Roubini Global Economics, an independent, global macroeconomic and market strategy research firm. He holds a doctorate in economics from Harvard University, has been on the faculty of Yale University, and is currently a professor of economics at New York University’s Stern School of Business. He has been an advisor to President Clinton, Treasury Secretary Timothy Geithner, and the IMF.

From Cassandra to sage

In 2005, he predicted that home prices were riding a speculative wave that would soon sink the economy. Wall Street scoffed, and called him “Dr. Doom” and “permabear.” In September 2006, he warned the IMF that the United States was likely to face a huge housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession. In a few short years, his once seemingly overly negative, doomsday predictions have been matched, if not exceeded, by reality. Which is why I think it’s important to listen to Roubini when he has something to say about the economy.

On August 12, 2011, he sat down to an interview with the Wall Street Journal and predicted the chances of a double dip recession are now greater than 50%. At best, he said, we can expect subpar economic growth going forward for an extended period. One of his most unexpected statements was this:

Karl Marx had it right. At some point capitalism can destroy itself, because you can’t keep on shifting income from labor to capital, without having an excess capacity and lack of aggregate demand. And that’s what has happened. We thought that markets work but they’re not working; . . . It’s a self-destructive process.

FYI: Because of our current economic instability, Roubini is keeping all of his money in cash and out of the stock market because of the threat of another crash. To underscore this point, he mentions an associate who just took $1 billion out of the market. He recommends this for at least the next three months to avoid a loss of 40 to 50 percent. He says “better safe than sorry.”

If you want to know what our economic future may hold, this twenty-minute interview is worth your time.

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