How Did The Great Recession Affect Minorities?

The economic impact of the Great Recession on minorities and immigrants has been particularly severe. Hispanic households lost 66 percent of their wealth between 2005 and 2009, while black households lost 53 percent and white households lost only 16 percent. By 2010, when the general unemployment rate was about 10%, blacks had a rate of 16 percent and Latinos had a rate of 13 percent. This economic downturn coincided with a significant growth in the population of minorities and immigrants. Non-whites accounted for 83 percent of the population growth between 2000 and 2008. Children of color increasingly outnumber whites in the youngest age groupings.

The recession has already had a significant impact on how the voter views government and public policy, according to polls. Congress’ approval ratings are at an all-time low, and trust in government is certain to erode as the public grows increasingly convinced that the government is powerless to reverse the economic downturn. Because lack of trust in politics and government has been found to reduce voting and other types of political participation, these views may have an impact on political behavior. This impact, according to Sanchez, Medeiros, and Huyser, may be more obvious in minority and immigrant groups, which have been affected the hardest by the crisis and have seen public resources committed to them decline.

There have been considerable shifts in the demography of the US population both before and during the recession, most notably a rapid increase in the minority population. While this has the capacity to influence public perceptions of minorities and social programs seen to benefit minorities on its own, the recession may have magnified or modified these effects. Sanchez, Medeiros, and Huyser propose to test two hypotheses concerning the influence of these substantial economic and demographic transitions on attitudes toward immigrants and minorities. The first hypothesis is based on past research that shows increased racial antagonism, feelings of competitiveness, and residential segregation among whites as populations of color and/or immigrants grow. The second hypothesis is based on theories that suggest that collective economic suffering might lead to increased empathy for vulnerable groups and increased support for government resources to help those in need.

Who were the hardest hit by the Great Recession?

Rising unemployment, dropping property values, and the stock market decline all had an impact on those approaching retirement, either directly or indirectly. Furthermore, many elderly persons who were not directly impacted by the recession had children or other relatives who were. For many older persons, the recession’s financial difficulties resulted in changes in wealth and spending patterns, as well as physical and mental health issues with long-term effects.

What was the impact of the 2008 recession on minority populations?

In 2008, the United States had its worst recession in decades. Minorities were already in a more vulnerable economic state than whites before the recession, owing to a lack of suitable job possibilities. As the economy and labor market deteriorated, so did the fortunes of American families, particularly minorities.

The rise in economic insecurity during the 2008 crisis followed the preceding business cycle’s exceptionally poor labor market performance, which lasted from March 2001 to December 2007. Most households’ incomes did not rise when the economy recovered from the previous recession.

Although this is true for all middle-class families, minority families are disproportionately affected by economic hardships. When compared to their white counterparts, minorities have fewer job opportunities, lower wages, or both. As a result, their incomes are lower and their income growth is slower. As a result, minorities are less well-positioned than white families to save and accumulate money, which would provide a financial buffer in difficult times. When hard times strike, minorities are more likely than white families to find themselves in a precarious financial situation.

The numbers paint a plain and bleak story. The following set of important indicators illustrates minorities’ economic trends over the last business cycle. Then we compare them to what happened during the 2008 recession.

Unemployment

Minority unemployment rates were significantly higher than white unemployment rates in December 2008. African Americans had an 11.5 percent unemployment rate, compared to 8.9 percent for Hispanics and 6.3 percent for whites. To put it another way, blacks were at least 40% more likely than whites to be unemployed at the end of 2008.

Furthermore, while unemployment rates climbed for all categories, minorities’ rates rose far faster than whites’. White unemployment increased by 2.1 percentage points to 6.3 percent in December 2008, up from 4.2 percent in December 2007, while African-American unemployment increased by 2.9 percentage points and Hispanic unemployment increased by 3.1 percentage points during the same time period. To put it another way, minorities’ unemployment rate increased by at least 38.1 percent more than whites’.

These rises in the unemployment rate occurred during the 2008 crisis, after a seven-year period in which minorities had made no meaningful progress in lowering their jobless rates in comparison to whites. Minority unemployment rates were nearly the same in December 2007 as they were in March 2001, when the last business cycle began.

In December 2007, the unemployment rate for whites was 4.2 percent, up from 3.7 percent in March 2001, while Hispanics’ rates were 5.8 percent and 6.0 percent, and African Americans’ rates were 8.6 percent and 8.1 percent, respectively. That is, over the entire decade, fundamental inequalities in unemployment rates by race and ethnicity persisted.

Employment growth

Falling employment is the inverse of rising unemployment. Minority employment declined faster than white employment in 2008. In 2008, employment for African Americans and Hispanics fell by 1.9 percent, while white employment fell by 1.6 percent.

These job losses followed a period of modest job gains, at least for African Americans and whites. From March 2001 to December 2007, the annualized job growth rate for whites was 0.6 percent, while that for African Americans was 0.9 percent.

During the previous business cycle, Hispanics had significantly higher job gains as a result of robust employment gains in discrete industries such as construction and hotels and restaurants. Hispanic employment increased by 3.6 percent on an annualized basis from March 2001 to December 2007. Nonetheless, these high job growth were inadequate to close the employment gap between Hispanics and whites.

Employment to population ratio

In general, employment gains over the previous business cycle were insufficient to keep up with population growth. Whites had a 62.1 percent employed percentage of the population in December 2008, compared to 61.9 percent for Hispanics and 56.1 percent for African Americans.

These levels were substantially below the employed shares at the start of the previous business cycle in March 2001 for all groups. The employment rate at the time was 64.9 percent for whites and 64.9 percent for Hispanics, compared to 60.5 percent for African Americans.

There were two stages to the overall drop in the employed percentage of the respective populations. During the previous business cycle, each group saw a steady drop, indicating that employment growth lagged behind population growth. Between March 2001 and December 2007, the employment-to-population ratio for whites fell by 0.2 percentage points on an annually basis, while the same ratio for African Americans fell by 0.4 percentage points on average, and the ratio for Hispanics remained unchanged. However, as the recession hit, employment-to-population ratios plummeted by 1.4 percentage points for whites, 1.8 percentage points for African-Americans, and 2.7 percentage points for Hispanics. The recession exacerbated an already terrible condition.

Earnings

Earnings disparities continue between whites and minorities. In the third quarter of 2008, Hispanics’ average weekly wages were $529.00 (in 2007 currency), while whites’ were $696.33.

These disparities have narrowed slightly because Hispanic inflation-adjusted earnings increased slightly during the previous business cycle, from March 2001 to December 2007, while white inflation-adjusted earnings remained flat during the previous business cycle and fell sharply during the current recession. Between the first quarter of 2001 and the fourth quarter of 2007, Hispanics’ average weekly wages in 2007 dollars increased by 0.6 percent on an annualized basis, while whites’ earnings fell by 0.03 percent on an annually basis. Hispanic incomes increased by 7.9% after the recession hit, whereas white earnings fell by 2.6 percent on an annualized basis from December 2007 to September 2008.

It’s worth noting, though, that Hispanics’ recent earnings improvements are likely to be fleeting. Earnings often trail after employment, and since Hispanics enjoyed the most job growth during this time, it stands to reason that their earnings increases would last longer than those of whites and African Americans. As a result, given that Hispanic employment rates have fallen along with those of other groups, it is projected that Hispanic wages growth will eventually decline.

The earnings disparity between African Americans and whites has widened at the same time. The median weekly incomes of African Americans and whites remain significantly different. In the third quarter of 2008, African Americans earned $554.99, compared to $696.33 for whites.

Since 2000, African Americans’ average weekly incomes (in 2007 USD) have decreased somewhat. They first climbed at a negative 0.06 percent annualized pace during the first quarter of 2001 and the fourth quarter of 2007, roughly twice as quickly as whites’ earnings decreased over the same time period. Over the 2008 recession, African Americans’ incomes decreased by an annualized 2.3 percent from December 2007 to September 2008, compared to a 2.6 percent drop for whites during the same period.

Family income

Family incomes for whites were roughly 30% higher than for Hispanics in 2007, the most recent year for which data is available, and this disparity has grown over time. From 2000, the final full year before the previous recession began, to 2007, the last year for which data are available, Hispanics’ median family income fell by an average of 0.5 percent per year, falling to $38,679 from $39,935, a total loss of $1,256. (in 2007 dollars). Whites’ median family income, on the other hand, declined at a considerably slower rate of 0.003 percent per year, for a total drop of $12 between 2000 and 2007, from $54,932 to $54,920. (in 2007 dollars).

The story is the same when it comes to racial comparisons. Between 2000 and 2007, African Americans’ median household income fell by an average of 0.7 percent per year, to $34,091 from $34,720 (in 2007 USD), much quicker than whites’ but not as quickly as Hispanics’. African Americans’ income in 2007 was $1,629 less than it was in 2000.

Poverty

Surprisingly, despite significant employment improvements, Hispanic poverty worsened, highlighting the low pay at which Hispanics typically work. In 2007, 8.2 percent of whites were poor, up from 5.4 percent in 2000, but still significantly behind the 21.5 percent of Hispanics who were poor. Furthermore, from 2000 to 2007, the percentage of Hispanics living in poverty increased by 0.3 percent per year on average. Between 2000 and 2007, the percentage of white people living in poverty increased by an average of 0.4 percent every year.

Between 2000 and 2007, the percentage of African Americans living in poverty climbed at a faster rate than that of whites and Hispanics, increasing at an annual rate of 0.7 percent. The percentage of African Americans living in poverty increased from 19.3 percent in 2001 to 24.4 percent in 2007, implying that African Americans were nearly three times as likely as whites to be poor in 2007. (8.2 percent).

Health care

There are still significant gaps in health insurance coverage. In 2007, 10.4% of whites were without health insurance, compared to 32.1 percent of Hispanics. Between 2000 and 2007, the percentage of Hispanics with health insurance climbed by an average of 0.07 percent per year, whereas the percentage of whites without health insurance decreased by an average of 0.2 percent per year.

The percentage of African Americans who have health insurance is still significantly lower than that of whites. In 2007, 19.2% of African Americans did not have health insurance, whereas just 10.4% of whites did. Between 2000 and 2007, the percentage of African Americans with health insurance declined marginally, from 81.7 percent to 80.8 percent, or 0.1 percent each year, roughly half the rate of whites but far less than Hispanics.

Retirement plan participation

Equally unequal is access to employer-sponsored retirement savings. In 2007, less than one-third of Hispanic private-sector workers participated in an employer-sponsored retirement plan, compared to more than half of whites. In 2002, the earliest year for which data are available, Hispanics were already less likely than whites to join in an employer-sponsored retirement plan, with only 31.1 percent of Hispanics participating compared to 58.8 percent of whites. Between 2002 and 2007, the percentage of Hispanics who participated in a private-sector employer-sponsored retirement plan fell by 0.1 percentage points each year on average, while whites’ participation fell by 0.2 percentage points per year. Importantly, the percentage of Hispanics who enrolled in an employer-sponsored retirement plan fell to 30.6 percent in 2007, well below the 57.6 percent of whites.

The disparities across races aren’t quite as pronounced. In 2007, just 47.1 percent of African Americans, compared to 57.6 percent of whites, participated in an employer-sponsored retirement plan, a 10.5 percentage point gap. In 2002, 47.5 percent of blacks and 58.8 percent of whites participated in an employer-sponsored retirement plan. Between 2002 and 2007, the percentage of African Americans who participated in a private-sector employer-sponsored retirement plan fell by 0.1 percentage points on a yearly basis.

Homeownership rate

Whites had a homeownership rate of 73.8 percent in 2000, and 75.2 percent in 2007, compared to only 49.7 percent for Hispanics. In 2007, the African-American homeownership rate was 47.2 percent, the same as it was in 2000.

African Americans were left behind in the overall increase in homeownership. Between 2000 and 2007, Hispanic homeownership increased by 0.5 percentage points per year, from 46.3 percent to 49.7 percent. Whites, on the other hand, had their homeownership rate rise by only 0.2 percentage points on average during the same time period. And, after peaking in 2004, the homeownership rate for African Americans began to decline, eventually leveling off in 2007 at the same level as in 2000.

High-cost mortgages

In 2007, nearly 29% of home-purchase loans granted to Hispanics were high-cost, compared to only 11% for whites. Hispanics were much more likely than whites to receive high-cost mortgages. According to data obtained under the Home Mortgage Disclosure Act, 83,393 Hispanic loans were high cost, compared to 208,253 market rate loans.

In 2007, more than 34% of home-purchase loans granted to African Americans were high-cost, compared to only 11% for whites. Compared to whites, African Americans received far more high-cost mortgages. According to data obtained under the Home Mortgage Disclosure Act, there were 67,480 high-cost loans provided to African Americans, compared to only 130,985 market rate loans.

Unemployment: Bureau of Labor Statistics, United States Department of Labor, “Survey of the Current Population.” Blacks and African Americans are referred to as African Americans, while Hispanics and Latinos are referred to as Hispanics. In order to include unemployment data for 2008, quarterly data is used.

Employment increase, according to the Bureau of Labor Statistics of the United States Department of Labor “Survey of the Current Population.” Blacks and African Americans are referred to as African Americans, while Hispanics and Latinos are referred to as Hispanics. Quarterly statistics are utilized to supplement the 2008 employment data that is already accessible.

U.S. Department of Labor, Bureau of Labor Statistics, Employment to Population Ratio, “Survey of the Current Population.” Blacks and African Americans are referred to as African Americans, while Hispanics and Latinos are referred to as Hispanics. Quarterly statistics are utilized to supplement the 2008 employment data that is already accessible.

U.S. Department of Labor, Bureau of Labor Statistics, average weekly wages “Survey of the Current Population.” Blacks and African Americans are referred to as African Americans, while Hispanics and Latinos are referred to as Hispanics. The median weekly earnings of a full-time, non-self-employed wage and salary earner before taxes, including overtime pay, commissions, and tips obtained from a principal job, are referred to as usual median weekly earnings. Quarterly statistics are utilized to supplement earnings data from 2008 that is already accessible.

Historical Income Tables from the United States Bureau of the Census. Non-Hispanic whites are referred to as white. Data on white non-Hispanics alone began in 2002, and covers people who reported white alone or in combination. Since 2005, the data has represented black alone or in combination. Hispanic origin people might be of any race.

Poverty: Income, Poverty, and Health Insurance Coverage in the United States 2007, U.S. Bureau of the Census, 2008. Non-Hispanic whites are referred to as white. Data on white non-Hispanics alone began in 2002, and covers people who reported white alone or in combination. Since 2005, the data has represented black alone or in combination. Hispanic origin people might be of any race.

Income, Poverty, and Health Insurance Coverage in the United States 2007, U.S. Bureau of the Census. Non-Hispanic whites are referred to as white. Data on white non-Hispanics alone began in 2002, and covers people who reported white alone or in combination. Since 2005, the data has represented black alone or in combination. Hispanic origin people might be of any race.

Patrick Purcell’s retirement savings, 2008. “Summary of Recent Trends in Pension Sponsorship and Participation.” (Congressional Research Service, Washington.) White refers to non-Hispanic whites, whereas African American refers to non-Hispanic blacks. The year 2002 was the first time the “Purcell’s study, the “Current Population Survey,” employed enlarged categories of race and ethnicity, making comparisons with previous years difficult.

Housing Vacancies and Homeownership, Bureau of the Census, and Homeownership. Non-Hispanic whites are referred to as white. Data on white non-Hispanics alone began in 2002, and covers people who reported white alone or in combination. Only African Americans are referred to as African Americans. Hispanic origin people might be of any race.

Data from the Home Mortgage Disclosure Act on high-cost mortgages. Non-Hispanic whites are referred to as white. Hispanic origin people might be of any race. High-cost mortgages are ones having interest rates that are three points or more higher than the treasury rate at the time the loan was taken out.

How did the economic downturn effect African Americans?

Millions of people were not only laid off, but also faced the potential of defaulting on college loans, outstanding credit card debt, and even home foreclosure.

Because of their financial weakness, Blacks were hit harder than other Americans during the Great Recession.

For example, in 2009, the overall unemployment rate in the United States reached 10%. It was over 16 percent for African-Americans, compared to little under 9 percent for whites.

The earnings of African-American families have likewise decreased more than those of white families. In 2010, the average Black household earned $50,654, or 61 percent of what a white family earned.

Even now, despite the fact that black earnings have rebounded, African-Americans earn only 63 percent of what whites do. When you consider that net worth and homeownership figures haven’t recovered, if not regressed, since the recession ended, it’s clear that Blacks are still vulnerable to future economic downturns.

In 2016, the average net worth of an African-American household was $138,200, compared to $933,700 for a white family. Because the vast majority of American billionaires are white, this figure is exceptionally high.

This can be explained in part by a large disparity in the rate of homeownership, which is one of the most important roads to long-term financial security. It’s just 42 percent for blacks, down from a peak of 48 percent in 2004, compared to 73 percent for whites.

Furthermore, Blacks are more likely to possess less valuable homes, with an average value of $94,400 compared to $215,800 for whites.

Houses with the least amount of equity and worth are ripe for foreclosure, as they have been in previous recessions, and their owners have fewer options for using their home as collateral in an emergency.

Due to a lack of capital, African-Americans are more likely than whites to accumulate credit card debt. In an economic crisis, even the smallest emergency would result in a decreased ability to satisfy financial obligations.

What impact did the Great Recession have on people?

This RFP has now been closed. The general rationale for the 30 project wins made in 2011 through early 2012 can be found in the original RFP outlined below.

The United States is now two years past the official end of the Great Recession, which lasted the longest and deepest since the 1930s. Although GDP and the stock market have risen since the recession ended in June 2009, the social and economic consequences of the downturn continue to ripple across the US economy. According to labor market data, more than 14 million Americans are unemployed, with 6.3 million of them out of work for more than six months. Another 11.3 million people are working less than they would like either part-time or looking for work but not finding it. Job growth is encouraging but sluggish, and at current rates of growth, reestablishing the pre-recession unemployment rate of 5% could take a decade or longer. Although the unprecedented number of home foreclosures experienced during the recession and its immediate aftermath has lessened, the housing market remains stagnant, with home prices hitting new lows in the first quarter of 2011. State and local budgets have seen huge gaps between revenues and expenditures as a result of the economic downturn, and stock market losses have exposed unfunded pension plans across the country. To attain balanced budgets, governments at all levels will have to undertake a mix of discretionary cuts and higher taxes, as predicted by the long-term repercussions of this recession. Public sector job losses have canceled out 40% of private sector employment increases in the two-year recovery, and government workforces are set to be under pressure for some time to come.

Given the likelihood of continued slow growth, high unemployment, low home values, and severe government fiscal limitations, the Russell Sage Foundation has opted to fund a series of studies on the social and economic consequences of the Great Recession. Long-term economic stagnation will most likely change American institutions and significantly impair many Americans’ life chances. We’re looking for studies that look at these effects across a broad spectrum of social and economic life, including, but not limited to, effects on individual aspirations and optimism about the future; health and mental health; family formation and stability, as well as children’s well-being; the viability of communities, particularly those hardest hit by the foreclosure crisis; the performance of the educational system at all levels; the incidence of crime and the performance of the criminal justice system. The Appendix demonstrates the types of topics that the Foundation is concerned about in each of these social and economic spheres. These are examples of the types of challenges the Foundation is interested in solving, although they are not meant to be exhaustive or exclusive.

In general, the Foundation will consider funding for a variety of projects, including:

Long-term studies on the effects of the Great Recession over the next three to five years. As a result, the effects of the fiscal crisis on state budgets, for example, may take some time to manifest. A comparison of the decisions governments make in balancing their budgets, as well as the implications of those choices, may not be significant for several years after the current crisis has ended. In another area, the consequences of the recession on families may not become apparent until after families have exhausted their resources in dealing with unstable work or housing, and if there are lasting repercussions on children, these may take even longer to manifest.
Analytic research that look at the long-term repercussions of the Great Recession across a variety of social and economic realms. An examination of how the recession affects underprivileged adolescents, for example, could look into the probable link between local variation in unemployment, school dropout, and criminal involvement. Alternatively, a study of older Americans’ labor market participation might look into the consequences of changes in pension wealth and the early receipt of Social Security benefits after a job loss.
Innovative investigations of the Great Recession’s deeper, more subtle consequences on psychological attitudes and social norms. Will the exceptionally high rates of long-term unemployment that have characterized this recession and its aftermath, for example, result in long-term scarring and decreased aspirations? Will high rates of overdue debt and “underwater” mortgages impair financial responsibility in general and undermine default norms? Or will the need to deleverage lead to a more conservative and cautious approach to household financial decisions in the United States? To assess the subjective impact of changed financial conditions, studies of these subjective issues may require a creative combination of qualitative and quantitative methodologies.
Studies of how the Great Recession has affected American institutions, particularly in reaction to economic and other challenges that have arisen during the crisis and its aftermath. Universities, for example, have faced severe budget restrictions as a result of state budget cuts or private endowment losses at a time when student financial aid needs are rising. What has been the impact of universities’ responses to these pressures? To establish generalizations about institutional change, studies of institutional adaptation of topics like these may rely on case studies of specific institutions or the collecting of administrative data across institutions.

In general, we’re looking for creative research projects that go beyond simple trend analysis to look at unintended consequences of the Great Recession. Such study might use comparisons of present conditions with what is known about the results of previous recessions to make testable predictions about the current slump’s likely effects. We expect many of the funded initiatives to employ publicly available data sets, but we also understand that valid assessments of predictions regarding the effects of the Great Recession may require conducting new waves of past surveys or replicating data from other sources that give pre-recession baselines. We are happy to evaluate ideas for restricted data acquisition or collection in such instances. The Foundation’s funding will be limited to research help, data analysis expenditures, and limited release time for analyzing and writing up results in all other circumstances. We anticipate that all working papers and research briefs from projects financed under this initiative will be published (non-exclusively) on the RSF website.

The second round of funding for this endeavor is now underway. After the first round, we sponsored ten initiatives in nine of the appendix’s domains (a description of projects funded in the first round can be found here). We will consider projects from all domains in this round, but we are particularly interested in projects that address the following topics that were not addressed in the first round: changes in attitudes and norms caused by the economic downturn, effects on communities particularly hard hit by foreclosures and/or unemployment, changes in the incidence of crime linked to recessionary conditions, and effects of the fiscal crisis on state and local budgets. We’re also interested in study on the labor market’s performance in the United States throughout this extended era of high unemployment. Although there are no restrictions on the quantity of funding requests that will be considered, cost/benefit analysis will be a major factor in the evaluation of all projects. For your information, prizes accepted in the first round typically ranged from $75,000 to $250,000 for project periods ranging from one to four years.

We ask all academics interested in being a part of this program to send us a letter of inquiry of no more than three single-spaced pages explaining the research topic on the effects of the Great Recession that you would want to do. Your letter should explain and estimate the research expenditures involved, as well as outline and motivate the hypothesis concerning the effects of the Great Recession that you are interested in exploring. It should also specify out the empirical work required and the data sources to be used.

All letters of enquiry will be reviewed by the Foundation’s Advisory Committee, and detailed proposals will be solicited for the initiatives that appear to be the most promising.

Over the last decade, poverty in the suburbs has soared by more than a third. Although poverty rates in the inner city are still greater, the gap is closing. Earlier downturns mainly evaded the effects of suburban areas, but not this time.

What happens when a community’s unemployment rate and foreclosure rate are both high? What effect will it have on housing stock, home values, fiscal capacity, out-migration, and more ephemeral issues such as social capital and social efficacy?
What impact has the recession had on the poor’s regional distribution and concentration?
How would a decrease in residential mobility influence a community’s social infrastructure?

From less than 3% of disposable personal income in 2005-2007 to nearly 6% of disposable income in 2010, the personal savings rate has increased. Furthermore, the total quantity of outstanding consumer credit has decreased for the first time since 1940 as a result of the present crisis.

What has the recession’s overall impact been on personal finances, consumer spending, and consumer confidence?
How did households cut back on their consumption? Are these solutions viable in the event that revenues do not recover?
Have people lowered or raised their savings and retirement contributions? To stay afloat, have families taken out loans against their current investment and retirement accounts? What are the ramifications?
Are these patterns indicating a fundamental shift in consumer and financial behavior?

For the better part of the last decade, crime rates in the United States have remained steady or even decreased marginally. According to some research, those tendencies may be in peril. While the general crime rate in New York City stays steady, the most current statistics shows that the murder rate has increased by 15% over the previous year.

Will crime rates that have been declining or constant in the long run continue in the same path or change?
With fewer resources and higher demands, how well will police, courts, and prison institutions be able to function?
Will states employ early release procedures to reduce the number of people incarcerated and their costs? Is it likely that caseloads for probation and parole will vary, and if so, how will this affect technical violation rates?
What will happen if a larger number of incarcerated people are released into economically challenged communities? What will happen to those people, their families, and their communities?

Families are likely to be affected in a wide range of ways. Job losses and unemployment, one of the most apparent characteristics of the recession, have been linked to higher stress, poorer health outcomes, decreases in children’s academic achievement and educational attainment, marriage age delays, and changes in household structure. According to recent statistics, the number of multigenerational homes increased by 12% between 2006 and 2010.

What impact has it had on marriage, divorce, cohabitation, fertility, and family structure? Has this had a greater impact on some groups than others?
What have been the ramifications for home labor division? Are fathers more likely than mothers to get laid off? Is it true that mothers work more when their fathers work less?
What impact has this had on young adult children? Are more people staying at home longer because of poor career prospects? Do they need more financial and social assistance?
What has been the impact on family function, particularly the quality of parents’ relationships, parent-child connections, and parenting?
What impact has this had on children’s immediate results, such as academic performance, behavior, and delinquency, as well as their long-term life prospects?

States faced overall budget shortfalls of nearly $300 billion between 2009 and 2012 due to a drop in revenue and higher demand for state services. The American Recovery and Reinvestment Act (ARRA) brought temporary relief, but it has finally come to an end.

What policy adjustments have states implemented to overcome substantial budget deficits, given that nearly all states are suffering significant budget gaps? What are the distributional effects of policy changes at the state level?
How will governments allocate the more constrained resources associated with diminishing tax receipts, given that health and prisons have been the fastest rising parts of state budgets over the last several decades? Which states are most likely to enact tax increases rather than spending cuts, and what effect will this have on the state’s economy?
The financial crisis has brought to light the underfunding of pension systems across the country. What are the chances that states will follow through on promised benefits? What effect will it have on state budgets?

Thirty-five states reduced education budgets totalling roughly $8 billion in K-12 and higher education in 2010, and 31 states are seeking more cutbacks in 2011.

What impact do budget cuts have on the delivery of public K-12 education? What impact has graduation rates, class sizes, school closures, and teacher employment and turnover had?
What has happened to the quality of public higher education at all levels, from four-year universities to community colleges?
Has there been a rise in the demand for a college education? Has it changed as a result of the family’s socioeconomic condition or the demography of the students?
What has changed in terms of the net cost of a college education, and what are the implications for students from various socioeconomic backgrounds?

Between 2006 and 2009, the number of home foreclosure filings grew from from 1.2 million to over 4 million per year, with black and Hispanic areas being disproportionately affected. Home losses of this magnitude and concentration are likely to cause more community upheaval and deterioration. Home ownership is also one of the most common means of accumulating wealth in the United States, meaning more financial insecurity for millions of Americans in the short and long term.

Which people and communities have been the most affected by foreclosures? What have been the ramifications for both those who have lost their homes and the localities that have seen the highest rates of home loss?
Have the losses in wealth caused by home foreclosures been allocated differently across different groups?
Have housing policies aimed at reducing home foreclosures been successful? Who has benefited the most?

Job loss is a major source of stress, and it has been linked to a variety of health effects, including an increased risk of heart attack and stroke, diabetes, arthritis, and psychiatric issues, as well as increased melancholy, anxiety, and sleep loss.

What kinds of health and mental-health changes can be ascribed to the Great Recession’s economic uncertainty and its aftermath?
Has there been a psychological shift in the general public’s aspirations, optimism for the future, and expectations for performance and upward mobility, particularly among the young?
What are the health ramifications in neighborhoods that have been impacted especially hard by the recession?
What are the anticipated ramifications of health-care and mental-health service cuts?

As the recession has set in, the number of economic migrants crossing the Mexican border into the United States has dramatically decreased, and internal migration patterns may have transformed as typical employment possibilities for migrants have decreased.

What are the current trends in immigration and internal migration? What will the ramifications be for immigrant communities?
What has been the impact of the collapse of the building industry on internal migration? Is there a link between changes in other industries and changes in internal migration?
How has extended economic suffering and uncertainty influenced Americans’ attitudes toward immigrants, immigration, and the immigration debate?
Are the lasting consequences of the recession affecting return migration patterns?

The official poverty rate rose from 13.2% in 2008 to 14.3% in 2009, with roughly 4 million more people living in poverty than the previous year. Since 1969, nearly every recession has resulted in considerable rises in poverty rates, with the consequences disproportionately affecting children.

What impact has the recession had on the income and wealth of people at various levels of the income distribution? Which individuals and groups have experienced the most transformation? Which assets (for example, retirement assets, property, and investments) have been most sensitive to the downturn if diverse vehicles for wealth generation have been disproportionately impacted?
Has the rate of poverty changed, and who is more likely to slip into or stay in poverty?
Is the greater concentration of incomes at the top of the income distribution a result of the recession?
Has the gradual increase in economic inequality that has marked the United States since the 1970s been aggravated, reduced, or remained unchanged?

A lengthy period of high unemployment, typified by historically high long-term unemployment rates, is expected to have far-reaching implications for the operation of the US labor market, as well as the lives of the unemployed, their families and communities, and the institutions that support them.

How bad are the ramifications of long-term unemployment? Who are the people who are most affected? What policies and programs work best to re-employ long-term unemployed people?
Is the size of the recession a sign of a massive reorganization of the US labor market? To what extent are structural mismatches between skill demand and supply, rather than weak demand, the causes of long-term unemployment?
What geographical areas and localities have the highest levels of unemployment, and why? What are their chances of getting back on their feet?

During the Great Recession, American politics was extremely turbulent, with rising populist fury directed at incumbents blamed for the crisis, significant electoral swings, and new forms of political organizing and fundraising.

In the aftermath of the recession, how are political attitudes, party affiliation, and political involvement changing?
What role do business and government play in producing the problem and resolving it, according to Americans?

State and municipal pension liabilities are anticipated to be close to $4 trillion, while private pension account balances are down approximately $800 billion from pre-recession levels, notwithstanding the stock market recovery.

What effect do pension losses have on pensioners’ projected retirement income? Which groups have been hurt the hardest?
What impact does the loss of pensions and jobs have on older Americans’ retirement decisions? Is there a shift in the distribution of retirement age based on income or education?

Approximately 46% of the 14.6 million unemployed people have been jobless for 27 weeks or longer, and 31% have been jobless for 52 weeks or longer.

How well did the social safety net in the United States perform during the recession and the subsequent period of high unemployment? How has the recession affected the need for emergency and safety-net services? How well have different programs (such as TANF, SSI, and SNAP) responded to increased demand?
Have community nonprofits been able to address any gaps that exist? Is it possible that the impact of the recession on such NGOs has reduced their ability to respond to rising need?
In a high-unemployment environment, what happens to welfare claimants whose time-limited benefits expire?
What was the American Recovery and Reinvestment Act’s impact? What will happen to state welfare programs now that the ARRA is no longer in effect?

What impact did the Great Recession have on the global economy?

When the decade-long expansion in US housing market activity peaked in 2006, the Great Moderation came to an end, and residential development began to decline. Losses on mortgage-related financial assets began to burden global financial markets in 2007, and the US economy entered a recession in December 2007. Several prominent financial firms were in financial difficulties that year, and several financial markets were undergoing substantial upheaval. The Federal Reserve responded by providing liquidity and support through a variety of measures aimed at improving the functioning of financial markets and institutions and, as a result, limiting the damage to the US economy. 1 Nonetheless, the economic downturn deteriorated in the fall of 2008, eventually becoming severe and long enough to be dubbed “the Great Recession.” While the US economy reached bottom in the middle of 2009, the recovery in the years that followed was exceptionally slow in certain ways. In response to the severity of the downturn and the slow pace of recovery that followed, the Federal Reserve provided unprecedented monetary accommodation. Furthermore, the financial crisis prompted a slew of important banking and financial regulation reforms, as well as congressional legislation that had a substantial impact on the Federal Reserve.

Rise and Fall of the Housing Market

Following a long period of expansion in US house building, home prices, and housing loans, the recession and crisis struck. This boom began in the 1990s and accelerated in the mid-2000s, continuing unabated through the 2001 recession. Between 1998 and 2006, average home prices in the United States more than doubled, the largest increase in US history, with even bigger advances in other locations. During this time, home ownership increased from 64 percent in 1994 to 69 percent in 2005, while residential investment increased from around 4.5 percent of US GDP to nearly 6.5 percent. Employment in housing-related sectors contributed for almost 40% of net private sector job creation between 2001 and 2005.

The development of the housing market was accompanied by an increase in household mortgage borrowing in the United States. Household debt in the United States increased from 61 percent of GDP in 1998 to 97 percent in 2006. The rise in home mortgage debt appears to have been fueled by a number of causes. The Federal Open Market Committee (FOMC) maintained a low federal funds rate after the 2001 recession, and some observers believe that by keeping interest rates low for a “long period” and only gradually increasing them after 2004, the Federal Reserve contributed to the expansion of housing market activity (Taylor 2007). Other researchers, on the other hand, believe that such variables can only explain for a small part of the rise in housing activity (Bernanke 2010). Furthermore, historically low interest rates may have been influenced by significant savings accumulations in some developing market economies, which acted to keep interest rates low globally (Bernanke 2005). Others attribute the surge in borrowing to the expansion of the mortgage-backed securities market. Borrowers who were deemed a bad credit risk in the past, maybe due to a poor credit history or an unwillingness to make a big down payment, found it difficult to get mortgages. However, during the early and mid-2000s, lenders offered high-risk, or “subprime,” mortgages, which were bundled into securities. As a result, there was a significant increase in access to housing financing, which helped to drive the ensuing surge in demand that drove up home prices across the country.

Effects on the Financial Sector

The extent to which home prices might eventually fall became a significant question for the pricing of mortgage-related securities after they peaked in early 2007, according to the Federal Housing Finance Agency House Price Index, because large declines in home prices were viewed as likely to lead to an increase in mortgage defaults and higher losses to holders of such securities. Large, nationwide drops in home prices were uncommon in US historical data, but the run-up in home prices was unique in terms of magnitude and extent. Between the first quarter of 2007 and the second quarter of 2011, property values declined by more than a fifth on average across the country. As financial market participants faced significant uncertainty regarding the frequency of losses on mortgage-related assets, this drop in home values contributed to the financial crisis of 2007-08. Money market investors became concerned of subprime mortgage exposures in August 2007, putting pressure on certain financial markets, particularly the market for asset-backed commercial paper (Covitz, Liang, and Suarez 2009). The investment bank Bear Stearns was bought by JPMorgan Chase with the help of the Federal Reserve in the spring of 2008. Lehman Brothers declared bankruptcy in September, and the Federal Reserve aided AIG, a significant insurance and financial services firm, the next day. The Federal Reserve, the Treasury, and the Federal Deposit Insurance Corporation were all approached by Citigroup and Bank of America for assistance.

The Federal Reserve’s assistance to specific financial firms was hardly the only instance of central bank credit expansion in reaction to the crisis. The Federal Reserve also launched a slew of new lending programs to help a variety of financial institutions and markets. A credit facility for “primary dealers,” the broker-dealers that act as counterparties to the Fed’s open market operations, as well as lending programs for money market mutual funds and the commercial paper market, were among them. The Term Asset-Backed Securities Loan Facility (TALF), which was launched in collaboration with the US Department of Treasury, was aimed to relieve credit conditions for families and enterprises by offering credit to US holders of high-quality asset-backed securities.

To avoid an increase in bank reserves that would drive the federal funds rate below its objective as banks attempted to lend out their excess reserves, the Federal Reserve initially funded the expansion of Federal Reserve credit by selling Treasury securities. The Federal Reserve, on the other hand, got the right to pay banks interest on their excess reserves in October 2008. This encouraged banks to keep their reserves rather than lending them out, reducing the need for the Federal Reserve to offset its increased lending with asset reductions.2

Effects on the Broader Economy

The housing industry was at the forefront of not only the financial crisis, but also the broader economic downturn. Residential construction jobs peaked in 2006, as did residential investment. The total economy peaked in December 2007, the start of the recession, according to the National Bureau of Economic Research. The drop in general economic activity was slow at first, but it accelerated in the fall of 2008 when financial market stress reached a peak. The US GDP plummeted by 4.3 percent from peak to trough, making this the greatest recession since World War II. It was also the most time-consuming, spanning eighteen months. From less than 5% to 10%, the jobless rate has more than doubled.

The FOMC cut its federal funds rate objective from 4.5 percent at the end of 2007 to 2 percent at the start of September 2008 in response to worsening economic conditions. The FOMC hastened its interest rate decreases as the financial crisis and economic contraction worsened in the fall of 2008, bringing the rate to its effective floor a target range of 0 to 25 basis points by the end of the year. The Federal Reserve also launched the first of several large-scale asset purchase (LSAP) programs in November 2008, purchasing mortgage-backed assets and longer-term Treasury securities. These purchases were made with the goal of lowering long-term interest rates and improving financial conditions in general, hence boosting economic activity (Bernanke 2012).

Although the recession ended in June 2009, the economy remained poor. Economic growth was relatively mild in the first four years of the recovery, averaging around 2%, and unemployment, particularly long-term unemployment, remained at historically high levels. In the face of this sustained weakness, the Federal Reserve kept the federal funds rate goal at an unusually low level and looked for new measures to provide extra monetary accommodation. Additional LSAP programs, often known as quantitative easing, or QE, were among them. In its public pronouncements, the FOMC began conveying its goals for future policy settings more fully, including the situations in which very low interest rates were likely to be appropriate. For example, the committee stated in December 2012 that exceptionally low interest rates would likely remain appropriate at least as long as the unemployment rate remained above a threshold of 6.5 percent and inflation remained no more than a half percentage point above the committee’s longer-run goal of 2 percent. This “forward guidance” technique was meant to persuade the public that interest rates would remain low at least until specific economic conditions were met, exerting downward pressure on longer-term rates.

Effects on Financial Regulation

When the financial market upheaval calmed, the focus naturally shifted to financial sector changes, including supervision and regulation, in order to avoid such events in the future. To lessen the risk of financial difficulty, a number of solutions have been proposed or implemented. The amount of needed capital for traditional banks has increased significantly, with bigger increases for so-called “systemically essential” institutions (Bank for International Settlements 2011a;2011b). For the first time, liquidity criteria will legally limit the amount of maturity transformation that banks can perform (Bank for International Settlements 2013). As conditions worsen, regular stress testing will help both banks and regulators recognize risks and will require banks to spend earnings to create capital rather than pay dividends (Board of Governors 2011).

New provisions for the treatment of large financial institutions were included in the Dodd-Frank Act of 2010. The Financial Stability Oversight Council, for example, has the authority to classify unconventional credit intermediaries as “Systemically Important Financial Institutions” (SIFIs), putting them under Federal Reserve supervision. The act also established the Orderly Liquidation Authority (OLA), which authorizes the Federal Deposit Insurance Corporation to wind down specific institutions if their failure would pose a significant risk to the financial system. Another section of the legislation mandates that large financial institutions develop “living wills,” which are detailed plans outlining how the institution could be resolved under US bankruptcy law without endangering the financial system or requiring government assistance.

The financial crisis of 2008 and the accompanying recession, like the Great Depression of the 1930s and the Great Inflation of the 1970s, are important areas of research for economists and policymakers. While it may be years before the causes and ramifications of these events are fully known, the attempt to unravel them provides a valuable opportunity for the Federal Reserve and other agencies to acquire lessons that can be used to shape future policy.

Who was the most affected by the Great Recession and what circumstances contributed to it?

The Great Recession, which ran from December 2007 to June 2009, was one of the worst economic downturns in US history. The economic crisis was precipitated by the collapse of the housing market, which was fueled by low interest rates, cheap lending, poor regulation, and hazardous subprime mortgages.

What impact did the 2008 economic downturn have on black communities?

What was the impact of the economic downturn that began in 2008 on black communities? It jeopardized the gains in black house ownership rates that had been made. In 2010, roughly __________% of all African Americans under the age of 18 lived in single-parent households.

Is the Great Depression considered an epoch?

The Great Depression, which lasted from 1929 to 1939, was the worst economic downturn in the history of the industrialized world. It all started after the October 1929 stock market crash, which plunged Wall Street into a frenzy and wiped out millions of investors.

What part did racism play in the housing crisis that precipitated the Great Recession?

The financial crisis was caused by the collapse of the property market, which had its origins in racial discrimination. It resulted in mass foreclosures, which disproportionately harmed racial minorities. The Great Recession’s aftereffects continue to exacerbate racial disparities.

The majority of African Americans live in which of the following regions?

According to a new Census 2000 analysis issued today by the Commerce Department’s Census Bureau, about 6 in 10 people reporting as Black or African American, alone or in combination with other races, lived in ten states where over half of the US population lived last year.

One of a series of Census 2000 briefs, The Black Population: 2000, states that 36.4 million persons, or 12.9 percent of the overall population, identified as Black or African American. This figure comprises 34.7 million people who identified as Black alone (12.3%), as well as 1.8 million people who identified as Black in combination with one or more other races (0.6%).

New York, California, Texas, Florida, Georgia, Illinois, North Carolina, Maryland, Michigan, and Louisiana were the ten states with the highest percentage of African Americans. New York, California, Texas, Florida, and Georgia each had over 2 million Black residents.

In Census 2000, 54 percent of persons who identified as Black lived in the South, 19 percent in the Midwest, 18 percent in the Northeast, and ten percent in the West.
The South (20%) had the highest percentage of people claiming as Black as a percentage of their total population, followed by the Northeast (12%), the Midwest (11%), and the West (10%). (6 percent).
More than 1 million persons identified as Black in each of the ten southern states: Texas, Florida, Georgia, North Carolina, Maryland, Louisiana, Virginia, South Carolina, Alabama, and Mississippi.
In the year 2000, the state with the most persons reporting as Black was New York (3,014,385).
There were 96 counties in which Black people made up at least 50% of the overall population, 95 of which were in the South.
People who identified as Black in the Northeast were concentrated in a band of counties from from Philadelphia to Providence, R.I., and northward along the Hudson Valley from New York City.
Although Black people were not concentrated in Midwestern counties, Blacks made up a sizable share of the population in metropolitan counties around cities like Chicago, Gary, Ind., and Detroit.
Southern California, the San Francisco and Sacramento areas, Denver and Colorado Springs, and Seattle and Tacoma in Washington state also had substantial concentrations of people reporting as Black.
With around 2.3 million persons reporting as Black, New York City led the way, followed by Chicago with 1.1 million, and Detroit, Philadelphia, and Houston with 500,000 to 1 million apiece.
Gary had the largest percentage of people reporting as Black, at 85 percent, among cities with a population of 100,000 or more, followed by Detroit, at 83 percent.

Because respondents could report one or more races for the first time in 2000, the race data from the 1990 census and preceding censuses are not directly comparable.