NEW YORK (TheStreet) -- The middle class is moving forward financially, but still can't get back to square one in the seven-plus years since the economy suffered its worst battering since the Great Depression, and analysis from the Federal Reserve saying the middle class had largely recovered from the Great Recession may have been premature.
At least, that's the view from researchers at Ohio State University.
Instead of "catching up" in key household economic areas such as home values, investment portfolios and household debt, as the Fed indicated had already occurred, the Ohio State study says Americans are still down 14% in household income since 2006, just before the economy turned south.
The OSU study also shows the middle class absorbed the "biggest hit" from the downturn.
That outlook differs substantially from the federal government's assessment of household income in current terms, which claimed household income "was the highest in nominal terms since 1945."
But the Federal Reserve didn't cover all the bases in a few critical areas, most notably in a "failure" to adjust for inflation and population growth; the inclusion of stock market accounts held by foreign investors (which should not have been included in the Fed's assessment data, the OSU report says) and it included nonprofit wealth, when only household income should have been included (again, according to OSU researchers).
That led to a more optimistic economic forecast than reality holds, says Randy Olsen, report co-author and an economics professor at the university.
"All four of these issues with the Fed report pointed in the same direction, leading toward a conclusion that was far rosier than what exists in the real world," Olsen says.
Olsen and co-author OSU economics professor Lucia Dunn relied heavily on data compiled from the Consumer Finance Monthly, OSU's own monthly telephone survey of households, which the study touts as a more accurate barometer of economic wealth than the Federal Reserve's data. (Olsen says the CFM data excludes the four economic data points listed above.)
"The CFM dataset fills in some key gaps in the history of the Great Recession and allows us to have a much clearer picture of what happened to American households during this economic downturn," Olsen adds.
The OSU date breaks down the path of U.S. economic wealth as follows:
- The "real" net worth of U.S. households reached a high point in 2006, at $398,620.
- In 2009, that figure had fallen to $217,687.
- In 2012, U.S. household wealth rose to $333,859.
"Additional improvements" in 2013 further boosted household income, but still at a level 14% below those 2006 highs.
Some demographic groups, such as less wealthy Americans, have actually recovered more than the middle class, but there's a reason for that, too.
"Many may have already lost their homes and had their credit cards taken away," Olsen explains. "If they can't borrow, they can't go into debt. Some may have paid off their old car loans, which gives them a small asset."
Suffering the most were middle-class households, defined by OSU as Americans aged 35 to 54. As of 2012, this group was still 27% behind their household income highs in 2006.
"What we're seeing in these middle-aged people is very disheartening, because they are in what should be their peak earning years, when they should be accumulating assets before retirement," Olsen says. "As much as the Federal Reserve might want people to believe we have recovered from the recession, the bottom line is that we haven't."
That's a tough assessment for the middle class, which historically has carried the economy on its back.