Effects of the Financial Crisis and Great Recession on American Households

46 Pages Posted: 14 Nov 2010

See all articles by Michael D. Hurd

Michael D. Hurd

RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Susann Rohwedder

RAND Corporation

Multiple version iconThere are 3 versions of this paper

Date Written: September 1, 2010

Abstract

In this paper we present evidence from high-frequency data collections dedicated to tracking the effects of the financial crisis and great recession on American households. These data come from surveys that we conducted in the American Life Panel – an Internet survey run by RAND Labor and Population. The first survey was fielded at the beginning of November 2008, immediately following the large declines in the stock market of September and October 2008. The next survey followed three months later in February 2009. Since May 2009 we have collected monthly data on the same households. This paper shows the levels and trends of many of these data which summarize the experience and expectations of households during the recession.

We find that the effects of the recession are widespread: between November 2008 and April 2010 about 39 percent of households had either been unemployed, had negative equity in their house or had been in arrears in their house payments. Reductions in spending were common especially following unemployment. On average expectations about stock market prices and housing prices are pessimistic, particularly long-run expectations. Among workers, expectations about becoming unemployed have recovered somewhat from their low point in May 2009 but still remain high.

Overall the data suggest that households are not optimistic about their economic futures.

Keywords: Financial Crisis, House Prices, Unemployment, Consumption Smoothing, Expectations, Retirement

JEL Classification: D12, D31, D84, D91, J64

Suggested Citation

Hurd, Michael D. and Rohwedder, Susann, Effects of the Financial Crisis and Great Recession on American Households (September 1, 2010). Netspar Discussion Paper No. 09/2010-046. Available at SSRN: https://ssrn.com/abstract=1708074 or http://dx.doi.org/10.2139/ssrn.1708074

Michael D. Hurd

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States
310-393-0411 (Phone)
310-393-4818 (Fax)

State University of New York at Stony Brook - College of Arts and Science - Department of Economics ( email )

Stony Brook, NY 11794
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Susann Rohwedder (Contact Author)

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

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