Columnist

The American consumer is the great engine of growth for the $19 trillion U.S. economy, representing nearly 70 percent of spending. If the consumer is confident and happy, chances are that the economy is satisfactory or robust. On the other hand, if the consumer is confused and worried, the economy may be weak and vulnerable to setbacks.

Which is it now? The answer matters for everyone.

The latest reading comes from a massive survey conducted every three years by the Federal Reserve to describe Americans' finances. Three conclusions stand out from the newly released survey, two good and one not-so-good. The upbeat findings are that the economic recovery is finally reaching the poor and that Americans are reducing their debt burdens. The less hopeful trend is that the country's deep disparities of income and wealth have hardly changed.

Let's take them one by one.

It's hard to quarrel with success. From 2013 — when the last Fed study left off — to 2016, median family income rose 9.6 percent, from $48,100 to $52,700. By contrast, the previous study found that median family income had dropped 5 percent from 2010 to 2013. Presumably, this reflected the Great Recession's lingering adverse effects. (The median income is the income exactly in the middle — half are above, half below.)

Not only were incomes up in the past three years, but also gains were strong among minorities. Median incomes rose 10 percent for African American families and 15 percent for Hispanics. (All changes are adjusted for inflation and expressed in 2016 dollars.) Generally, the Fed study parallels a recent Census Bureau report on household incomes and poverty. However, the Fed study has much more detail. It reports, for example, that half of American families have retirement accounts.

It also has voluminous data on wealth: what people own and owe. The Census Bureau report has none. Trends in wealth mirrored trends in income. Although median net worth jumped 16 percent to $97,300, the proportionate gains for African Americans (up 29 percent) and Hispanics (46 percent) were greater. (Net worth reflects people's assets, such as homes and stocks, minus their debts.)

What is especially notable is that most American families have reduced their debt burdens, albeit gradually. The share of families who need to devote more than 40 percent of their income to paying interest and principal on their loans dropped from 11 percent in 2007 to 7 percent in 2016. Likewise, the median family with credit card balances — loans — carried 3 percent less than in 2013.

All this suggests that the consumer is still in a position to propel the economy forward. Debt service isn't so great as to channel ever larger amounts of cash away from consumer spending. Jobs are plentiful, and the prices of homes (still owned by 64 percent of households) and stocks (52 percent) have recovered, engendering optimism.

So what's not to like? What do we learn from the Fed study — called the Survey of Consumer Finances — that might inspire caution? Well, a couple of things.

For starters, some recent gains simply recoup ground lost during the 2008-09 financial crisis and the Great Recession. It's true that median family income rose 10 percent from 2013 to 2016 to $52,700. But it's also true that it hasn't yet attained its previous peak of $55,000 in 2004.

Similarly, despite recent gains, minorities lag well behind whites economically. In 2016, white non-Hispanic families had median incomes of $61,200, much higher than median incomes for blacks ($35,400) and Hispanics ($38,500). Gaps in net worth are also huge: The median for whites was $171,000 in 2016 compared with $17,600 for blacks and $20,700 for Hispanics.

The picture that emerges is frustratingly mixed. The recent gains are undeniable, and they seem to reflect the normal mechanics of recovery from deep recession more than any single act of policy. People overborrowed; they either defaulted or scrambled to repay. Firms struggled to rebuild cash reserves. Although these responses initially weakened the economy, they now seem to have restored confidence.

Still, the confidence seems more wide than deep. It's hard to believe that most Americans have forgotten the Great Recession. Anything that reminds them of it — a slump in stock prices, much higher interest rates, some unforeseen economic setback — could unleash a self-fulfilling cycle of pessimism. There are limits to consumers' resilience.

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