Many Americans have not fully recovered financially from the Great Recession, more than a decade later.
Nearly 48% of Americans who were adults when the downturn first began in December 2007 say they have seen no improvement in their financial situation since then, according to a newly released Bankrate survey based on responses from more than 2,700 consumers. One in four respondents—or 25%—say their overall financial situation is about the same as it was prior to the economic crisis; 23% say their situation is worse.
The survey findings conflict with reports of a growing job market and economic expansion. The unemployment rate has fallen to a near half-century low and there’s been 104 consecutive months of job creation.
However, not all Americans are enjoying the uptick from the economy, and the recovery may be uneven. Many homeowners faced setbacks in their home value during the Great Recession that hurt them financially, according to the survey.
“The echoes of the financial crisis and Great Recession remain very present in the financial lives of many Americans, despite the improvement in the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “While some have managed to prosper in the decade since, there are still tens of millions who are struggling to even get back to where they were before the economy took a turn for the worse.”
Karen Dynan, an economics professor at Harvard, told Bankrate that the uneven economic recovery may be partially from underemployment. Some individuals may be working part-time and seeking full-time work. Also, wage growth has mostly been stagnant. Fifty-four percent of Americans surveyed by Bankrate say their wages or salaries haven’t recovered to their pre-recession levels.
A slow pace of wage growth, even while the unemployment rate sits at historic lows, “has been the puzzle of the economic recovery,” Gary Burtless, a senior fellow in Economics Studies at the Brookings Institution in Washington, D.C., told Bankrate. “We haven’t seen very much acceleration in wage gains or in the compensation per hour gains of American workers. That’s something of a mystery.”
Those who did report an improvement in their wages since the Great Recession tended to be at the upper income levels—those who earn $80,000 a year or more, the survey found.
Two in 10 Americans reported their home lost value during the Great Recession. Nineteen percent lost money in the stock market, 19% incurred substantial debt, and 15% said that either they or their partner lost their job. Seven percent depleted their emergency funds, and 6% say they drew from their retirement savings.
The survey found that more than a quarter—26%—of women said they are worse off now than prior to the Great Recession compared to 19% of men. Consumers with lower incomes and educational levels also were more likely to report being worse off.
But consumers seemed to have taken some lessons from the Great Recession. Many respondents say they’ve changed their financial habits as a direct result of the downturn. Twenty-nine percent say they have placed a priority on paying down debt; 23% are now saving more for emergencies; and 18% are saving more for retirement.
Source: “Survey: Nearly 1 in 4 American Adults Are Worse Off Now Than Before the Great Recession,” Bankrate.com (June 13, 2019)
