March 7 (Bloomberg) -- Why does the Bush administration get such little credit for what appear to be good economic times with solid growth and falling unemployment?

Read the Federal Reserve's latest Survey of Consumer Finances and find out.

It paints a picture of families whose inflation-adjusted incomes and net worth barely rose over the 2001 to 2004 period, a sharp contrast with large gains in both over the three prior years. That difference has underscored the feeling in many families of not getting ahead.

Administration officials, under siege on many fronts, are gearing up to tout the economy's strength when first-quarter GDP figures are reported in late April. Many forecasters expect growth to hit a 5 percent annual rate.

That's not likely to do much to improve the public's mood regarding the economy though -- or Republican chances in this fall's mid-term election -- because many workers' financial circumstances aren't improving nearly as fast as they did just a few years ago.

Politics aside, the relative stagnation of real incomes and of real net worth shown in the consumer finance survey should give pause to policy makers who remain intent on reducing the scope of the public safety net that helps families in tougher times. For one thing, the results show just how limited family resources are to cope with an interruption of their normal flow of income.

Financial Assets

For instance, when asked whether they had saved anything over the preceding year, nearly half of all families said they had not. Furthermore, 7 percent of families had no financial assets at all, and for the families that did, the median value of those assets was just $23,000 in 2004. That was a significant drop from $29,800 in 2001. By definition, at the median, half of all families had fewer assets and half had more.

In general, the families that did best were those who owned their own homes, and perhaps a second home, because of the rapid rise in home values. On the other hand, even in those cases, most ended the three-year period more heavily in debt than at the beginning because of larger mortgages.

In a commentary sent to Goldman Sachs clients on March 3, economist Ed McKelvey said the Fed survey provided distributional data on household income and wealth that are ``both highly uneven and stubbornly so'' and that the figures ``have important implications about the ability of U.S. households to manage their finances over the long term.

Net Worth

``For example, the lowest-wealth quartile has no net worth on balance, while the next quartile has controlled only about 3 percent of the total, and the top 10 percent have held about two- thirds. These figures have changed little over the past decade, a fact that attests to the difficulty that many households have in accumulating wealth,'' McKelvey said.

Of course, the 2001-2004 period encompassed a recession and what was initially an exceptionally weak expansion. In addition, the employment-population ratio last year was 1.7 percentage points lower than it was in 2000, so a smaller share of the population has a job than it did five years ago, which held down income growth.

And it isn't at all clear that, even with the unemployment rate again under 5 percent, that incomes are necessarily rising more rapidly once again. One indicator suggests they aren't: the profits share of national income has stayed unusually high relative to labor's share.

Retirement Saving

There was some fairly good news about retirement saving, even though the share of families with a retirement account of any type dipped from just over half to just under.

The median value of retirement accounts rose from $30,900 in 2001 to $35,000 in 2004, with both figures expressed in 2004 dollars. More importantly, the median value for families headed by someone aged 55 to 64, and therefore probably nearing retirement, increased markedly from $59,100 to $83,000.

Still, the median value of retirement accounts for lower- income families is tiny. For example, it was well under $10,000 for those in the bottom 40 percent of the income distribution.

For non-financial assets, the largest change in value, not surprisingly, was the increase in the median value of families' primary residences, which rose from $131,000 to $160,000, again with both figures in 2004 dollars. The median value of the debt secured by such homes also rose, from $74,600 to $95,000. Thus, the median amount of equity also increased.

Debt Payments

Since interest rates generally fell between 2001 and 2004, debt burdens did not rise as much as might have been expected. The ratio of total debt payments for the slightly more than three-fourths of all families that had debts to those families' total income rose 1.3 percentage points, to 18 percent. That reversed a similar drop over the prior three years.

A separate calculation showed that the proportion of debtors with payments exceeding 40 percent of their income rose by 0.4 percentage point, to 12.2 percent. Over the prior three years that share had dropped by 1.8 percentage points.

In terms of how families view their financial circumstances -- and how they see the state of the U.S. economy -- the important thing probably is not that their debt burdens have increased substantially. They haven't.

Family Income

On the other hand, in the earlier period those burdens went down, not up, and that can't make them particularly happy.

Nor can the specific figures for the changes in incomes and net worth.

From 1998 to 2001, before-tax median family income -- expressed in 2004 dollars -- increased from $38,800 to $42,500, nearly a 10 percent gain. Over the next three years, it rose only to $43,200, just a 1.6 percent gain.

Furthermore, the mean level of income actually declined. The mean rose from $61,700 in 1998 to $72,400 in 2001 and then dropped back to $70,700 in 2004, a 3.6 percent decline. Interestingly, the drop occurred entirely among the highest income group -- the top 10 percent -- where it fell to $302,100 from $322,400.

However, the gains in real income for every other income group were very small, much smaller than from 1998 to 2001.

It's little wonder that economic growth and falling unemployment aren't paying greater dividends for the president and his party when real incomes are doing so poorly for so many.

To contact the writer of this column: John M. Berry in Washington at jberry5@bloomberg.net

Last Updated: March 7, 2006 00:03 EST