updated 2/23/2006 12:27:19 PM ET 2006-02-23T17:27:19

Income growth stumbled at the family doorstep in 2004, new government figures show, declining by 2.3 percent after adjustment for inflation.

Major Market Indices

The Federal Reserve also reported Thursday that net worth grew, although at a slower pace than in 2001, the previous year for which the comparison was made.

The drop in inflation-adjusted incomes left the average family income at $70,700 in 2004. The median, or point where half the families earned more and half less, did rise slightly in 2004 after adjusting for inflation to $43,200, up 1.6 percent from the 2001 level.

The median, or midpoint for net worth rose by 1.5 percent to $93,100 from 2001 to 2004. That growth was far below the 10.3 percent gain in median net worth from 1998 to 2001, a period when the stock market reached record highs before starting to decline in early 2000.

The Fed’s results were published in the 2004 Survey of Consumer Finances, a document which provides a comprehensive view of how Americans are faring on such pocketbook issues as incomes and net worth.

The Fed survey found that the share of Americans’ financial assets invested in stocks dipped to 17.6 percent in 2004, down from 21.7 percent in 2001.

The percentage of Americans who owned stocks, either directly or through a mutual fund, fell by 3.3 percentage points to 48.6 percent in 2004, down from 51.9 percent in 2001.

Stock ownership rates were highest in 2004 among families with higher incomes and families aged 55 to 64. Overall median stock holdings fell to $24,300 in 2004, down from $36,700 in 2001.

With baby boomers turning 60 this year and nearing retirement, the survey found that the percentage of families with some type of tax-deferred retirement account, such as a 401k, fell by 2.5 percentage points to 49.7 percent of all families.

However, those who had retirement accounts saw their holdings increase. The median for holdings in retirement accounts rose by 13.9 percent to $35,200.

Net worth is the difference between a families assets and its liabilities.

The Fed survey found that debts as a percent of total assets rose to 15 percent in 2004, up from 12.1 percent in 2001. Mortgages to finance home purchases were by far the biggest share of total debt at 75.2 percent in 2004, unchanged from the 2001 level.

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