Nearly half of consumers who were adults in 2007 say their financial condition hasn’t improved since the Great Recession, according to a new survey from BankRate.
That recession began in late 2008 and lasted until June 2009. It was marked by the collapse of the housing market, a wave of home foreclosures, and a financial crisis that nearly brought down the world economy.
The survey found that 48 percent of the subjects who responded said they have seen no financial improvement in their lives as the economy has recovered. Twenty-five percent said their finances are about the same. Twenty-three percent say they are worse off financially.
The Great Recession resulted in a massive shrinking of the U.S. economy. Businesses reacted by scaling back their payrolls and almost overnight the unemployment rate hit 10 percent.
Housing market collapse
The housing market was flooded with homes for sale because it suddenly became very difficult to get a mortgage. Home values, which rose to unreasonable levels during the housing bubble, plummeted and many homeowners found they owed more than their homes were worth.
Today the unemployment rate is 3.6 percent and businesses complain they can’t fill open jobs. But salaries have grown slowly and haven’t kept pace with the rising cost of healthcare and education. The BankRate survey shows that some consumers have enjoyed the fruits of the recovery more than others.
“The echoes of the financial crisis and Great Recession remain very present in the financial lives of many Americans, despite the improvement in the broader economy,” said Mark Hamrick, Bankrate’s senior economic analyst. “While some have managed to prosper in the decade since, there are still tens of millions who are struggling to even get back to where they were before the economy took a turn for the worse.”
The survey results are in line with a recent Zillow survey that revealed many minority homeowners still have not recovered from the foreclosure crisis that was a huge catalyst for the Great Recession.
The price of residential real estate is even higher than it was during the housing bubble, but the Zillow report found home values have been much slower to recover in neighborhoods with large minority populations, remaining almost 10 percent below their peak values.
Zillow Senior Economist Sarah Mikhitarian noted that losing home value is almost always associated with a decline in net worth.
"The housing bust and foreclosure crisis that followed resulted in a disproportionate number of people of color losing not only the roof over their heads but the wealth -- and the opportunity to potentially build more -- that came with it," she said.
The BankRate survey shows 20 percent of consumers saw the value of their home go down during the Great Recession. Another 19 percent said they lost money in the stock market and incurred substantial debt.
Seven percent of people in the survey wiped out their emergency funds, while 6 percent tapped into their retirement savings.