PhotoWhen economists speak of a recession, they define it as two consecutive quarters of negative growth in the Gross Domestic Product (GDP), the total of all goods and services in the economy. By that definition, the recession ended in June 2009, with quarterly growth – albeit anemic – ever since.

But for many consumers, it feels like the recession has never ended. Two former Census Bureau researchers say that may be because consumer incomes are shrinking.

The researchers have compiled a study showing that from June 2009 to June 2011 – the two years following the official end of the recession - inflation-adjusted household income fell 6.7 percent. During that time, consumers have had to deal with sharply higher food and gasoline costs, as well as a reduction in available credit.

During the actual recession, one could argue that consumers actually fared better. Gas prices plunged and their incomes declined just 3.2 percent.

Significant reduction in the standard of living

Taken together, the years since the beginning of the recession, December 2007, household income is down nearly 10 percent. Researchers Gordon Green and John Coder call that a significant reduction in the standard of living.

Green and Coder say the 9.1 percent unemployment rate has a lot to do with the drop in household income. But even people with jobs appear to be earning less, with some unemployed taking new jobs at substantial pay cuts.

The research also found that groups already earning less than the average suffered the biggest drop in income, along with those who owned their own businesses. The drop in income for the self-employed in the two years since the end of the recession is nearly three times those who work for a private sector company.


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