What Americans lost in the recession

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- As the U.S. economy slowly recovers from a severe recession, Americans are still skating on thin ice financially, according to a report released Tuesday.

The report, from the Rockefeller Foundation and Yale University, said that 93% of U.S. households suffered at least one "substantial economic shock" in the 18-month period from March 2008 to September 2009.

The shocks included declines in wealth or earnings, as well as increased spending on "nondiscretionary" items such as medical needs or helping family members.

The most common shocks were tied to declines in household wealth, including investment losses and falling home values, which hit more than three-quarters of those surveyed. The study also showed that almost 70% of households suffered shocks related to unexpected medical bills or a drop in earning power.

Nearly one quarter of those surveyed were hit with declines in earnings of at least 25%, according to the study.

"This new report shows the extent to which American families have been rocked by economic shocks whose consequences include not just worry but also real economic hardship," Jacob Hacker, a professor of political science at Yale University who co-wrote the report, said in a statement.

The study, "Standing on Shaky Ground," is based on two surveys conducted in 2009, which focused on four key areas: employment, health care, family and wealth. It comes after the Economic Security Index, which Hacker published in July, rose in 2009 to its highest level in the past 25 years.

Middle-class blues

While economic insecurity has been increasing for years, it's not just low-income households that are struggling, the report showed. More than half of families with incomes between $60,000 and $100,000 that suffered an economic shock during the recession reported being unable to meet at least one basic need, such as paying for food, shelter or medical care.

Overall, households that experienced a "major economic dislocation" were up to four times more likely to have trouble meeting basic needs.

And the recession has left Americans vulnerable to future economic shocks. That's partly because of a loss of some safety nets like personal wealth and the ability to borrow from family and friends, according to the data.

Nearly half of U.S. households could go no more than two months without hardship if their earnings were to stop tomorrow, while one in five would suffer hardship within two weeks. By contrast, about 30% indicated that they could go six months without hardship if their earnings fell off immediately.

While most of the data for the study was collected in 2008 and 2009, Hacker said there has been little improvement since then.

"We've seen very little decline in many of these measures," Hacker said at a press conference in Washington, D.C. "I think we're going to see elevated levels of economic risk for some time to come." To top of page

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