Findings from the Federal Reserve’s Survey of Consumer Finances report show that the net worth of the average American family has fallen back to the same level as during the early 1990s, cancelling out two decades of accumulated prosperity.

The survey, which is taken every three years, shows that, between 2007 and 2010, the U.S economy had its most substantial downturn since the Great Depression in the 1930s. The level of unemployment rose from 5.0 percent to 9.3 percent between the third quarter of 2007 and the second quarter of 2009. It continued to rise, remaining at over 9.4percent in 2010.

The survey showed that home ownership rates fell in this period. They fell back down to a level that was last seen in 2001, due to some families finding it impossible to afford their own homes.

A hypothetical family, who sat in the middle of all demographics at the median point for earnings, had a net worth of USD 77,330 in 2010 compared to a much higher net worth of USD 126,400 in 2007. The crash in house prices accounted for three quarters of the loss.

The survey further highlights the problems that are stalling the pace of the recovery of the U.S economy. Middle-class families were found to have sustained the largest percentage losses in both wealth and incomes during the crisis, which only proved to limit their ability and willingness to spend.

However, in the light of all of these issues, spending still remained resilient, as families saved less money and paid back loans more slowly. The survey shows that households have made limited progress in reducing the amounts they owe to lenders, with 74.9 percent of households still owing something. However, it also confirmed that Americans are shifting the kinds of debts they hold and reducing the number of credit cards they carry. 32 percent of families said they had no cards, up from 27 percent in 2007.

A family’s spending was shown to be less than, or equal to, its income. However, the percentage of families that saved anything on the previous year had fallen from 56.4 percent in 2007 to 52.0percent in 2010.

The reasons for saving have also shifted, with the majority of families, 35.2 percent, saving for precautionary reasons – to make sure they have enough money for short term needs, further illuminating the distrust in the current economic situation. Currently, 30.1 percent of families are saving for retirement and 8.2 percent for education.

Nicola Peyton, nicola@romania-insider.com