How Did the Great Recession Affect U.S. Household Financial Burdens?

Consumer Interests Annual, Volume 59, 2013

10 Pages Posted: 10 Jul 2013

See all articles by Sherman D. Hanna

Sherman D. Hanna

Ohio State University (OSU)

Yoonkyung Yuh

Ewha Womans University

Date Written: July 9, 2013

Abstract

The recession that started in December 2007 was longer than any since the Great Depression of the 1930s. Household incomes dropped and unemployment rates increased to over 9%. We investigate the proportion of households having financial obligations over 40% of pretax income (having a high burden,) with financial obligations defined as debt payments, rent, vehicle leases, property taxes, and homeowners insurance. The proportion with high burdens increased for renters, from 35% in 2007 to 39% in 2010, but the proportion for homeowners decreased slightly, from 22% in 2007 to 21% in 2010. Multivariate analyses of the 2010 Survey of Consumer Finances (SCF) dataset show factors affecting the likelihood of having a high burden were generally similar to factors shown to be important in analyses of the 1992 to 2007 SCF datasets. The slight decrease in the proportion of homeowners with high burdens might be related to a shift of some households to renting. The increase in the proportion of renters with high burdens might reflect a continued deterioration of the economic conditions of renter households.

Keywords: Borrowing Decisions, Household Debt, Financial Obligations, Education, Expectations, Homeownership

JEL Classification: C250, D120, G210, G330

Suggested Citation

Hanna, Sherman D. and Yuh, Yoonkyung, How Did the Great Recession Affect U.S. Household Financial Burdens? (July 9, 2013). Consumer Interests Annual, Volume 59, 2013. Available at SSRN: https://ssrn.com/abstract=2291553

Sherman D. Hanna (Contact Author)

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

Yoonkyung Yuh

Ewha Womans University ( email )

Shinsegae Building Rm 425
11-1 Daehyun-dong, Seodaemun-gu
Seoul 120-750
Korea
82-2-3277-4076 (Phone)
82-2-3277-2835 (Fax)

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