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Effects of the Financial Crisis and Great Recession on American Households

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  • Michael D. Hurd
  • Susann Rohwedder

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.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16407.

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Date of creation: Sep 2010
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Handle: RePEc:nbr:nberwo:16407

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References

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  1. Melvin Stephens, 2001. "The Long-Run Consumption Effects Of Earnings Shocks," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 28-36, February.
  2. Julie Agnew & Pierluigi Balduzzi & Annika Sundén, 2003. "Portfolio Choice and Trading in a Large 401(k) Plan," American Economic Review, American Economic Association, American Economic Association, vol. 93(1), pages 193-215, March.
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Cited by:
  1. Ben Beachy, 2012. "A Financial Crisis Manual Causes, Consequences, and Lessons of the Financial Crisis," GDAE Working Papers, GDAE, Tufts University 12-06, GDAE, Tufts University.
  2. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2011. "How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?," Working Papers, University of Michigan, Michigan Retirement Research Center wp253, University of Michigan, Michigan Retirement Research Center.
  3. Angus Deaton, 2012. "The financial crisis and the well-being of Americans," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 1-26, January.
  4. Scott Fricker & Brandon Kopp & Nhien To, 2014. "Exploring a Balance Edit Approach in the Consumer Expenditure Quarterly Interview Survey," NBER Chapters, National Bureau of Economic Research, Inc, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  5. Brown, Martin, 2013. "The transmission of banking crises to households : lessons from the 2008-2011 crises in the ECA region," Policy Research Working Paper Series, The World Bank 6528, The World Bank.
  6. Darko, Francis Addeah & Eales, James S., 2013. "Meat Demand in the US During and After the Great Recession," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 150146, Agricultural and Applied Economics Association.
  7. Dimitrios Christelis & Dimitris Georgarakos & Tullio Jappelli, 2011. "Wealth Shocks, Unemployment Shocks and Consumption in the Wake of the Great Recession," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 279, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 19 Oct 2011.
  8. Masson, André & Arrondel, Luc, 2011. "L'épargnant dans un monde en crise. Ce qui a changé," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/7001, Paris Dauphine University.
  9. Erdal Tekin & Chandler McClellan & Karen Jean Minyard, 2013. "Health and Health Behaviors during the Worst of Times: Evidence from the Great Recession," NBER Working Papers 19234, National Bureau of Economic Research, Inc.
  10. Alan C. Monheit & Irina Grafova & Rizie Kumar, 2014. "How Does Family Health Care Use Respond to Economic Shocks? Realized and Anticipated Effects," NBER Working Papers 20348, National Bureau of Economic Research, Inc.
  11. James Banks & Rowena Crawford & Thomas Crossley & Carl Emmerson, 2012. "The effect of the financial crisis on older households in England," IFS Working Papers, Institute for Fiscal Studies W12/09, Institute for Fiscal Studies.
  12. Thomas F. Crossley & Joachim K. Winter, 2014. "Asking Households about Expenditures: What Have We Learned?," NBER Chapters, National Bureau of Economic Research, Inc, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  13. Bridget Terry Long, 2014. "The Financial Crisis and College Enrollment: How Have Students and Their Families Responded?," NBER Chapters, National Bureau of Economic Research, Inc, in: How the Financial Crisis and Great Recession Affected Higher Education National Bureau of Economic Research, Inc.
  14. repec:cbi:wpaper:06/rt/13 is not listed on IDEAS
  15. Arrondel, L. & Savignac, F. & Tracol, K., 2011. "Wealth Effects on Consumption Plans: French Households in the Crisis," Working papers, Banque de France 344, Banque de France.
  16. Roberto Álvarez & Luis Opazo, 2013. "Household Debt During the Financial Crisis: Micro-Evidence from Chile," Working Papers Central Bank of Chile, Central Bank of Chile 695, Central Bank of Chile.
  17. Robin L. Lumsdaine & Rogier J.D. Potter van Loon, 2013. "Wall Street vs. Main Street: An Evaluation of Probabilities," NBER Working Papers 19103, National Bureau of Economic Research, Inc.

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