Fed survey shows many low income families spending more than they make.

The Federal Reserve Bank has just completed another triennial survey of net wealth, the difference between assets and liabilities. The Fed’s Survey of Consumer Finances is based on interviews of 4,522 families.

The current survey showed that wealth is getting even more concentrated in the United States. Families in the bottom half of the income ladder have only 2.5% of all net worth (down from 2.8% in the last study), while families in the top 1% ($6 million or more in net worth) control 33.4% of net worth, up from 32.7% in the last study.

Increasing concentration of wealth is a problem, but of more concern at the moment is the fact that many people are eating the seed corn: Spending more than they earn. For example, the survey found that 25% of those in the lowest 25% of net worth said they spent more than they earned in 2004.

That sort of thing cannot last for long.

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