Great Recession lingers in Americans’ finances
55 percent of Americans who were adults at the time report financial woes from then that still affect their lives today.
It may have happened over a decade ago, but the Great Recession is still making its presence felt in Americans’ finances—and the effects are not pretty.
In fact, 48 percent of Americans who were adults when the downturn first hit in December of 2007 say their financial situations have not improved, according to a Bankrate report.
Not only do 25 percent say their overall financial situation is in pretty much the same shape as it was at the start of the Great Recession, but 23 percent say they’re worse off than they were then.
That’s saying something, considering that the country has been in the midst of a “recovery” and the lowest unemployment figures in nearly 50 years, but the economic boom has been very selective about the segments of the American population on whom it confers its benefits.
Not only do 55 percent of Americans who were adults at the time of the GR say they were negatively hit in some way, but the financial woes they report are life-changing events.
Twenty percent of Americans saw their home values plummet, while 19 percent lost money in the stock market, another 19 percent took on substantial debt and 15 percent said either they or their partner lost a job.
In addition, seven percent used up their emergency funds and 6 percent withdrew from retirement savings to get by.
And regarding that selectivity, 26 percent of adults who say they suffered financially during the Great Recession are still financially handicapped, compared with just 14 percent of those who came through the GR as if it were water off a duck’s back.
Women, too, have been affected disproportionately; 26 percent say they’re worse off now, compared with 19 percent of men.
Boomers, too, are more likely to have suffered (25 percent) than either the Silent Generation or millennials (19 percent in both instances).
Karen Dynan, an economics professor at Harvard who formerly worked for both the Federal Reserve’s board of governors and the Department of the Treasury, says in the report that it’s not surprising people haven’t yet recovered from what were “really bad” periods financially—the recession and the following weak recovery.
In fact, according to Dynan, employment isn’t yet what it should have been in the absence of the Great Recession. She’s quoted saying, “The standard measure of unemployed has been at pre-crisis levels for several years now, but it took longer for other measures—like people working fewer hours than they wanted—to recover. What all this means is that while a lot of people may be back in jobs with growing wages, some are only beginning to rebuild the wealth they lost during the long earlier period of weakness.”
Slow wage growth has compounded the problem, except for those in the upper tiers. According to Bankrate. The report highlights research from Gary Burtless, a senior fellow in Economics Studies at the Brookings Institution in Washington, D.C.
Burtless, says the report, analyzed data from the Bureau of Labor Statistics and estimated that since Q3 2009, approximately when the recession ended, “the share of laborers’ business sector output (or the percentage of economic output that workers get as compensation for their labor) has ranged between 56 and 58 percent. At the beginning of this century, that share was closer to 64 percent.”
And Bankrate’s own survey found that “most of the individuals who saw improvement in their wages belonged to the top income level, or those who make $80,000 a year or more…. The majority (65 percent) of individuals in this income category reported that their incomes were either much better or somewhat better since the crisis. That’s in line with Burtless’ analysis, which also found that the share of output is disproportionately going toward top earners.”
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