How Does Recession Lead To Poverty?

High unemployment, falling average earnings, greater inequality, and increased government borrowing are all hallmarks of a recession (a drop in national income). The severity of a recession is determined by how long it lasts and how deep the drop in output is.

Who is most affected by a recession?

Those who lose their jobs or have their hours/self-employed income drastically reduced will be the hardest hit.

It also relies on the type of recession that is occurring. The financial industry was the hardest damaged by the recession of 2009. Many well-paid ‘white-collar’ employees were laid off. Large-scale losses and earnings declines were experienced by banks. It had a significant impact on the housing market. The recession of 2020 will be different. The Coronavirus will have an especially negative impact on low-wage workers in the leisure and tourism industry. It will also depend on whether the worker is able to work from home (as a writer) or has a job in the physical economy, which would be hit harder. (For example, selling coffee) The impact will also be determined by the level of government assistance and whether or not they are eligible for benefits or rent relief.

Unemployment

Unemployment in the UK grew to almost 2.6 million during the recession of 2009, yet considering the severity of the recession, you might have anticipated it to be even higher (e.g. in the 1980s, unemployment rose to over 3 million). However, unemployment in several European countries has skyrocketed. Countries like Greece, Spain, and Portugal have over 20% unemployment rates.

Unemployment estimates could be understating the genuine degree of unemployment. In a recession, for example, the self-employed may face a significant drop in income yet are not considered unemployed.

Unemployment soared from 0% to 25% in three years during the Great Depression, when GDP fell rapidly.

Lower wages

In a downturn, businesses will aim to save expenses by keeping wages low. Some workers (particularly contract workers) may face wage decreases. This was a major element of the 2008-12 recession, which was exacerbated by rising living costs (e.g. higher taxes/oil prices). At the very least, cost-push inflation will be low in 2020, thanks to lower oil and commodity prices.

Underemployment is another factor that contributes to lower pay. Some employees may keep their jobs, but their hours will be reduced. Rather than working full-time, they choose to work part-time (e.g. 20 hours a week). As a result, while the growth in unemployment may be limited, many workers may face significant drops in effective income.

Self-employed people are particularly sensitive to economic downturns. During a downturn, self-employed people may experience a cash-flow shortage immediately and struggle to make ends meet.

Higher government borrowing

As a result of the lower profit margins, the government receives lower corporate tax revenue.
Stamp duty revenue is reduced due to decreasing house prices and fewer housing transactions.
Government spending on social benefits, such as unemployment benefits, housing assistance, and income support, is on the rise.

A recession tends to raise the budget deficit and overall government debt due to decreased tax receipts and rising welfare payments (automatic fiscal stabilisers).

Following the crisis of 2008/09, the US budget deficit increased dramatically. The estimate for 2021 is incorrect. Borrowing in the United States will increase in 2021 as a result of the Coronavirus and the impending recession.

Because they rely on property and banking sector tax receipts, many countries saw their budget deficits skyrocket following the 2008 credit crisis. The property market’s decline had a greater impact on tax revenues. VAT receipts have a lower cyclicality.

A budget deficit may also rise as a result of the government’s decision to adopt an expansionary fiscal policy in order to boost economic growth. The UK government, for example, reduced VAT in 2010.

Falling asset prices

Because demand declines during a worldwide recession, oil prices tend to fall. The 2020 Coronavirus resulted in a significant decline in oil prices as well as a drastic collapse in stock prices. It’s a measure of how much the recession is expected to hurt, according to analysts. The economy’s downward spiral is aided by falling asset prices. House prices falling produce a negative wealth effect, lowering confidence and encouraging more spending cuts. In 2020, we are expected to see a decrease in housing prices.

Bond Yields

Government bond yields usually decline during a recession. This is because, during a recession, people tend to save more and choose the safety of bonds over the stock market. Bond rates in the United States have plummeted to near-record lows in 2020. The yield on a two-year US Treasury bill is 0.46 percent.

If markets believe that the recession will pose major issues for the government and a liquidity shortfall, bond yields may climb. For example, due to genuine concerns about the Italian economy collapsing, Italian bond yields began to rise in 2020. Much will be determined by the ECB’s reaction and whether or not they will generate money to supply liquidity.

Lost Output

A recession causes lower investment, which might harm the economy’s long-term productive capability. If the recession is brief, the amount of lost output may be minimal economies can recover. However, in a prolonged recession, the amount of lost output increases. Because of the depth of the recession and structural deficiencies, the 2009 recession resulted in a permanent loss of output.

Impact on Workers

Unemployment can have long-term consequences. To begin with, unemployment is extremely stressful and can negatively impact a person’s morale and even health. Areas with significant unemployment have a higher rate of social problems. High unemployment can contribute to social unrest, resulting in issues such as rioting and vandalism. Unemployment in large numbers might jeopardize a country’s social fabric.

Unemployed people miss out on opportunities to learn new skills and receive on-the-job training. Long-term unemployment might make it more difficult for a worker to find work in the future; it can even lead to people giving up and leaving the labor market entirely.

Unemployment and recession can lead to an increase in social/health issues including depression and suicide.

Impact on firms

Demand will decline, resulting in lower profitability for businesses. Some businesses may begin to lose money and eventually go out of business. This could be due to intrinsic inefficiency, but it could also be owing to cyclical causes, such as an inability to borrow enough money to make it through the recession. Some businesses will be hurt harder than others during a recession. In a recession, demand for luxury items (international vacations) and high-end sports automobiles plummets, making these companies more vulnerable.

If a corporation has sufficient reserves, it will be able to weather the storm, even if it suffers a temporary loss. Price wars and cost-cutting may be pursued by a company during a recession.

Firms frequently engage in price wars in order to maintain market share. As a result, drastic price cuts are implemented, substantially reducing the company’s profitability.
Companies will be obliged to look closely at decreasing expenses and maybe eliminating unproductive portions of the business as a result of declining profitability. Companies may be forced to lay off employees in order to cut costs.

Are there any potential positive effects of a recession?

The collapse of Chinese manufacturing in early 2020 resulted in a significant reduction in air pollution, which will help to reduce mortality attributable to air pollution.
Surprisingly, some recessions have been shown to extend life expectancy. During the Great Depression, death rates in the United States declined in places where there was a lot of unemployment. People spent less money on alcohol and cigarettes, both of which are harmful to one’s health. In addition, there has been a decrease in traffic accidents. (NPR – Lower mortality rates due to the Great Recession)

What impact do recessions have on poverty?

The poverty rate varies over time due to a variety of reasons, including the economic cycle. That is, it rises (i.e., indicates a higher percentage of people living in poverty) during recessions, when jobs are scarce, and falls during economic recoveries, when employment are plentiful.

What are the effects of a recession on low-income families?

The poor are always the hardest hurt by recessions. Low-income families not only have the smallest budgets, but their incomes are also more vulnerable during economic downturns. In each of the last four recessions in the United States, the bottom 20% of earners fared significantly worse than the typical American.

However, new study shows that the most recent recession, the severe slump produced by the global financial crisis in 2007 and 2008 (often referred to as the Great Recession), was especially hard on the poor. According to economists from the University of Minnesota, the University of Toronto, and the University of Michigan, the average working-age adult in the bottom 10% of earners lost two-and-a-half times as much money as those in the top 10% a disparity much greater than in the previous three recessions.

What factors contribute to poverty?

It’s understandable that poverty rates are linked to the economy’s general health. Opportunities for employment and income growth increase as the economy grows. Stronger job markets and higher income levels tend to assist low-income families in rising over the poverty line.

Since 1959, poverty rates have risen in tandem with changes in the unemployment rate, and in opposite directions with changes in inflation-adjusted median income, according to national data (see chart). Lower poverty rates, in other words, are associated with lower unemployment or higher income.

According to some studies, the link between changes in the poverty rate and macroeconomic variables has weakened over time. While the link has diminished, changes in the unemployment rate and median salaries still predict changes in the poverty rate rather effectively, according to a working paper published by the National Bureau of Economic Research in October 2005 by Hilary Hoynes, Marianne Page, and Ann Stevens.

To anticipate annual changes in poverty rates from 1967 to 2003, the researchers used the US unemployment rate, median salaries, a measure of income disparity, and the country’s area. According to their findings, a one-percentage-point increase in the unemployment rate raises the poverty rate by 0.4 to 0.7 percentage points, while a one-percentage-point increase in median salaries lowers the poverty rate by 0.2 percentage points. From 1967 to 1979, the effects were slightly bigger for both factors, but they were slightly smaller from 1990 to 2003, indicating that macroeconomic variables have a weaker effect on poverty rates.

In light of these findings from a national model, a similar model was used to forecast changes in poverty rates using Ninth District county-level data from 1997 to 2003, the years for which annual county data were available. In comparison to the national model, the district model employed somewhat different measurements of poverty rates and median income, and the district model does not include a measure of income disparity. The district model also takes into account the population of the county, the number of minorities, and the median age.

A 1% rise in median income is related with a 0.2 percentage point decrease in the poverty rate, similar to the national model. The effect of unemployment is smaller than in the national model, implying that a one-percentage-point rise in unemployment is related with a 0.2-percentage-point increase in poverty. Furthermore, a 10,000-person increase in population is connected with a 0.05-percentage-point increase in poverty. When median income and unemployment rates are maintained constant, poverty rates in more populated counties are substantially higher, but the accompanying effect is minor.

Bigger poverty rates are linked to higher minority populations, while a lower poverty rate is linked to a higher median age. Furthermore, the data shows that having a higher percentage of the population with a college diploma is linked to lower poverty rates, while having a Native American reservation is linked to higher poverty rates.

What impact does the recession have on the economy?

A recession is a substantial economic slump that lasts longer than a few quarters and affects the entire economy.

The phrase is usually defined as a period in which the gross domestic product (GDP) falls for two consecutive quarters. In 1974, economist Julius Shiskin popularized this conventional viewpoint.

However, there are a slew of indications that might help decide whether or not we’re in a downturn.

Perhaps a better analogy for how economists define recessions is what Supreme Court Justice Potter Stewart famously said about his opinion on obscenity: Economists know it when they see it.

The National Bureau of Economic Research (NBER) a private, nonprofit research organization that tracks the start and end dates of U.S. recessions uses a broader set of economic indicators to define recessions, including employment rates, gross domestic income (GDI), wholesale-retail sales, and industrial production.

During a recession, these compounding impacts may manifest themselves in a variety of ways, including an increase in jobless claims, a shift in spending patterns, a slowing of sales, and a reduction in economic prospects.

What are the causes of the recession?

Readers’ Question: Identify and explain economic elements that may be negatively impacted by the current economic downturn.

Output is decreasing. There will be less production, resulting in reduced real GDP and average earnings. Wages tend to rise at a considerably slower pace, if at all.
Unemployment. The most serious consequence of a recession is an increase in cyclical unemployment. Because businesses are producing less, they are employing fewer people, resulting in an increase in unemployment.
Borrowing by the government is increasing. Government finances tend to deteriorate during a recession. Because of the greater unemployment rate, people pay fewer taxes and have to spend more on unemployment benefits. Markets may become concerned about the level of government borrowing as a result of this deterioration in government finances, leading to higher interest rates. This increase in bond yields may put pressure on governments to cut spending and raise taxes to reduce budget deficits. This could exacerbate the recession and make it more difficult to recover. This was especially problematic for many Eurozone economies during the recession of 2009. See also the Eurozone budgetary crisis.
Depreciation of the currency.
In a recession, currencies tend to depreciate because consumers predict reduced interest rates, so there is less demand for the currency. However, if there is a worldwide recession that affects all countries, this may not happen.
Hysteresis. This is the claim that a rise in cyclical (temporary) unemployment can lead to a rise in structural (long-term) unemployment. During a recession, someone who has been unemployed for a year may become less employable (e.g. lose on the job training, e.t.c) See hysteresis for more information.
Asset prices are declining. There is less demand for fixed assets such as housing during a recession. House price declines might exacerbate consumer spending declines and raise bank losses. A balance sheet recession (such as the one that occurred in 2009-10) is characterized by a drop in asset prices. Balance sheet recession is a term used to describe a period in which a company’s financial
Rising unemployment has resulted in social difficulties, such as increasing rates of social isolation.
Inequality has risen. A recession tends to exacerbate wealth disparities and poverty. Unemployment (and the reliance on unemployment benefits) is one of the most common causes of relative poverty.
Protectionism is on the rise. Countries are frequently encouraged to respond to a global downturn with protectionist measures (e.g. raising import duties). This results in retaliation and a general fall in commerce, both of which have negative consequences.

Evaluation can recessions be beneficial?

Some economists believe that a recession is required to address inflation. For example, the recessions of 1980 and 1991/92 in the United Kingdom.
Recessions can encourage businesses to become more efficient, and the ‘creative destruction’ of a downturn can allow for the emergence of new businesses.

These factors, however, do not outweigh the recession’s significant personal and social costs.

US house prices

House prices decreased just before the recession began in 2006, and declining house prices contributed to the recession’s onset. However, as the recession began, property prices plummeted much worse.

Great Depression 1929-32

The Great Depression was a significantly more severe downturn, with output dropping by more than 26% in three years.

It resulted in a substantially greater rate of unemployment, which increased from 0% to 25% in just two years.

What was the impact of the recession?

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 delinquent debt and “under water” mortgages erode default norms and weaken financial responsibility more broadly, or will the need to deleverage lead American households to adopt a more conservative, cautious approach to household financial decisions? Research into these subjective issues may necessitate a creative combination of qualitative and quantitative methods to assess the subjective impact of changed financial circumstances.
Studies of how the Great Recession has affected American institutions, particularly in response to fiscal and other pressures that have emerged during the crisis and its aftermath. For example, universities have faced severe budget constraints imposed either by state budget cuts or private endowment losses at a time when student needs for financial assistance are increasing. How have universities responded to these pressures and with what cohesion?

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 evidence, those trends may be in jeopardy. 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?

During a recession, how many people fall into poverty?

The US Census Bureau stated on September 16 that 43.6 million people, or one in every seven Americans, were living in poverty last year, a new sign of the severity of the Great Recession and extended unemployment crisis.

What impact does the economic downturn have on families?

The escalating economic crisis is having a significant impact on children, youth, and families. Its impacts are reverberating throughout the various contexts in which children and youth find themselves. Stressors such as job loss, home foreclosure, or a loss of family savings put a pressure on parental relationships and the family as a whole inside the nuclear family.

Basic necessities such as food security, healthcare, and housing may be unmet, exacerbating the shock for already low-income households. Increased rates of family conflict, child neglect and abuse, and intimate partner violence are all linked to poverty. On a larger scale, the worsening economy may have an influence on funding for public schools and community health centers, which are facing budget cuts at a time when their services are most needed by our nation’s children, youth, and families.

Children and adolescents are especially vulnerable at crucial developmental transitions, such as graduation from high school. Adolescents at this age may be obliged to postpone their ambitions for higher education in order to contribute to the household economy, which is becoming increasingly scarce. All of these changes can have a significant and long-term impact on the mental health of our country’s children and youth, producing anxiety, low self-esteem, and other emotional/behavioral issues.

Psychology has built a body of knowledge in study and practice to assist families in coping with financial stress and preventing mental health issues, child abuse, and intimate partner violence in children. Children, teenagers, and families can effectively cope with the stress caused by the economic crisis when given the right skills for positive parenting, preventing child abuse and neglect, and developing resilience, according to research. To counteract these pressures, psychologists are advised to participate in educational activities in schools and community forums such as parent teacher association meetings or YMCAs.

What was the impact of the Great Recession on people?

The recession spread as the financial crisis moved from the United States to other countries, particularly western Europe (where several big banks had extensively invested in American MBSs). Most developed countries experienced economic slowdowns of different severity (China, India, and Indonesia being prominent exceptions), and many of them responded with stimulus programs similar to the ARRA. The recession had major political ramifications in various nations. Iceland’s government disintegrated, and the country’s three largest banks were nationalized, as the country was particularly badly impacted by the financial crisis and experienced a severe recession. Latvia’s GDP dropped by more than 25% in 200809, and unemployment reached 22%. Latvia, like the other Baltic countries, was hit hard by the financial crisis. Meanwhile, sovereign debt problems erupted in Spain, Greece, Ireland, Italy, and Portugal, necessitating involvement by the European Union, the European Central Bank, and the International Monetary Fund (IMF) and the implementation of draconian austerity measures. Recovery was slow and uneven in all of the countries affected by the Great Recession, and the broader social consequences of the downturnincluding lower fertility rates, historically high levels of student debt, and diminished job prospects among young adults in the United Stateswere expected to last for many years.

What are the five factors that contribute to poverty?

The lack of education is the second underlying cause of poverty. Poverty is a cycle, and those who lack education are unable to improve their circumstances. According to the United Nations Educational, Scientific, and Cultural Organization (UNESCO), approximately 170 million people could be lifted out of extreme poverty if they just had basic reading abilities. People, on the other hand, are not getting educated in many parts of the world. The causes for this differ. Families often require their children to work, there aren’t any schools nearby, or girls aren’t being educated due to sexism and discrimination.