Great Recession, The

Great Recession, The

David B. Grusky
Bruce Western
Christopher Wimer
Copyright Date: 2011
Published by: Russell Sage Foundation
Pages: 344
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  • Book Info
    Great Recession, The
    Book Description:

    Officially over in 2009, the Great Recession is now generally acknowledged to be the most devastating global economic crisis since the Great Depression. As a result of the crisis, the United States lost more than 7.5 million jobs, and the unemployment rate doubled—peaking at more than 10 percent. The collapse of the housing market and subsequent equity market fluctuations delivered a one-two punch that destroyed trillions of dollars in personal wealth and made many Americans far less financially secure. Still reeling from these early shocks, the U.S. economy will undoubtedly take years to recover. Less clear, however, are the social effects of such economic hardship on a U.S. population accustomed to long periods of prosperity. How are Americans responding to these hard times? The Great Recession is the first authoritative assessment of how the aftershocks of the recession are affecting individuals and families, jobs, earnings and poverty, political and social attitudes, lifestyle and consumption practices, and charitable giving. Focused on individual-level effects rather than institutional causes, The Great Recession turns to leading experts to examine whether the economic aftermath caused by the recession is transforming how Americans live their lives, what they believe in, and the institutions they rely on. Contributors Michael Hout, Asaf Levanon, and Erin Cumberworth show how job loss during the recession—the worst since the 1980s—hit less-educated workers, men, immigrants, and factory and construction workers the hardest. Millions of lost industrial jobs are likely never to be recovered and where new jobs are appearing, they tend to be either high-skill positions or low-wage employment—offering few opportunities for the middle-class. Edward Wolff, Lindsay Owens, and Esra Burak examine the effects of the recession on housing and wealth for the very poor and the very rich. They find that while the richest Americans experienced the greatest absolute wealth loss, their resources enabled them to weather the crisis better than the young families, African Americans, and the middle class, who experienced the most disproportionate loss—including mortgage delinquencies, home foreclosures, and personal bankruptcies. Lane Kenworthy and Lindsay Owens ask whether this recession is producing enduring shifts in public opinion akin to those that followed the Great Depression. Surprisingly, they find no evidence of recession-induced attitude changes toward corporations, the government, perceptions of social justice, or policies aimed at aiding the poor. Similarly, Philip Morgan, Erin Cumberworth, and Christopher Wimer find no major recession effects on marriage, divorce, or cohabitation rates. They do find a decline in fertility rates, as well as increasing numbers of adult children returning home to the family nest—evidence that suggests deep pessimism about recovery. This protracted slump—marked by steep unemployment, profound destruction of wealth, and sluggish consumer activity—will likely continue for years to come, and more pronounced effects may surface down the road. The contributors note that, to date, this crisis has not yet generated broad shifts in lifestyle and attitudes. But by clarifying how the recession’s early impacts have—and have not—influenced our current economic and social landscape, The Great Recession establishes an important benchmark against which to measure future change.

    eISBN: 978-1-61044-750-8
    Subjects: Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Contributors
    (pp. vii-viii)
  4. Preface
    (pp. ix-xii)
    David B. Grusky, Christopher Wimer and Bruce Western

    • Chapter 1 The Consequences of the Great Recession
      (pp. 3-20)
      David B. Grusky, Bruce Western and Christopher Wimer

      After eighteen months of recession, the longest since the Great Depression of the 1930s, growth returned to the U.S. economy in the summer of 2009. The recession may now be officially over, but its effects live on in the form of high unemployment, a host of associated labor-market problems, and the ongoing threat of a double-dip recession. For the 13.9 million Americans who were still out of work as of May 2011, the recession continues and economic recovery remains elusive.

      The purpose of this book is to describe the various and manifold consequences of the recession, not just the direct...

    • Chapter 2 The Roots of the Great Recession
      (pp. 21-56)
      Neil Fligstein and Adam Goldstein

      The proximate cause of the “Great Recession” was the unraveling of the mortgage securitization industry beginning in 2007. What had been a relatively small niche market at the beginning of the 1990s was, from 1993 to 2007, transformed into the core activity of the rapidly expanding financial sector. At the peak of the mortgage business, in 2003, the financial sector, comprising about 10 percent of the labor force, was generating 40 percent of the profits in the American economy (Fligstein and Shin 2007; Krippner 2010). These profits were mostly being made from businesses engaged in selling mortgages and creating various...


    • Chapter 3 Job Loss and Unemployment
      (pp. 59-81)
      Michael Hout, Asaf Levanon and Erin Cumberworth

      Americans work for their living. Having a job is an economic and moral imperative for most Americans. The wages they earn fuel the rest of the economy. Employment begets the spending that begets more employment. In good times, it is a virtuous cycle reinforcing consumer-driven capitalism. Events like the financial crisis of 2007 and 2008 reverse the cycle, spinning the economy downward with a momentum that can be hard to break. Job losses reduce spending, which kills more jobs, reducing spending even more.

      Government spending can, in principle, offset the declining private spending. Paying unemployment benefits props up the spending...

    • Chapter 4 Poverty and Income Inequality in the Early Stages of the Great Recession
      (pp. 82-126)
      Timothy M. Smeeding, Jeffrey P. Thompson, Asaf Levanon and Esra Burak

      In this chapter we attempt to capture the effects of secular and cyclical forces on the incomes and economic well-being of Americans who are suffering through the Great Recession. Whenever useful and possible, we will compare this recession to earlier ones. Although our charge in this chapter is to examine how poverty and economic well-being have been affected by the Great Recession, one cannot of course understand such outcomes without looking at employment as well. We will therefore supplement some of the discussion in chapter 3, which focuses directly on the labor market and employment, with additional material that speaks...

    • Chapter 5 How Much Wealth Was Destroyed in the Great Recession?
      (pp. 127-158)
      Edward N. Wolff, Lindsay A. Owens and Esra Burak

      The United States has now undergone the worst recession since the Great Depression of the 1930s. The Great Recession has clearly taken a toll on people’s income and employment. While adequate levels of income are vital to everyday lives of Americans, the current recession is particularly notable for its enormous destruction of wealth. This wealth destruction may have long-term economic effects that persist well after employment rebounds. In addition, the recession’s roots lie in the housing market, which is where its long-term consequences might also be most felt. How are housing and wealth changing through the Great Recession? And how...


    • Chapter 6 An Analysis of Trends, Perceptions, and Distributional Effects in Consumption
      (pp. 161-195)
      Ivaylo D. Petev, Luigi Pistaferri and Itay Saporta-Eksten

      Consumption decisions are crucial determinants of business cycles and growth. As a share of U.S. gross domestic product (GDP) personal consumer expenditure has grown steadily since the early 1970s to reach, by 2008, 70 percent of GDP. The particularity of severe downturns is that consumer spending is likely not only to decline but also to undermine the prospects for recovery. In this chapter we review the evidence on changes in consumer spending during the so-called Great Recession, which began officially in December 2007 and ended June 2009. The objective is to explore the distinctive consumption aspects of this recession: How...

    • Chapter 7 The Surprisingly Weak Effect of Recessions on Public Opinion
      (pp. 196-219)
      Lane Kenworthy and Lindsay A. Owens

      Has the Great Recession altered Americans’ views about business, finance, government, opportunity, inequality, and fairness? Has it changed the public’s preferences about the appropriate role of government in regulating the economy and helping the less fortunate? Has it shifted political orientations or party allegiances?

      Public opinion surveys suggest that in some respects Americans’ attitudeshaveshifted in reaction to the Great Recession. But that isn’t especially surprising. Nor are changes in public opinion as important in a social or moral sense as loss of jobs, income, and wealth. More interesting and consequential is the question of whether changes in public...

    • Chapter 8 The Great Recession’s Influence on Fertility, Marriage, Divorce, and Cohabitation
      (pp. 220-246)
      S. Philip Morgan, Erin Cumberworth and Christopher Wimer

      The experience of the Great Recession is not confined to the spheres of jobs, earnings, and wealth. Amid the turmoil and economic upheaval in the wider economy, individuals and families go about their lives, planning marriages, suffering through breakups and divorces, planning families, and sorting out their living arrangements. The recession could conceivably have major effects on all of these family processes. Weddings and babies, after all, can be expensive endeavors. At the same time, partnering can create economies of scale that make meeting daily expenses easier. Financial strains can lead to strained relationships. And hardships can also bring families...


    • Chapter 9 The Federal Stimulus Programs and Their Effects
      (pp. 249-293)
      Gary Burtless and Tracy Gordon

      The recession that began in December 2007 ranks as the longest and deepest economic downturn since World War II. The American government’s response to it was also distinctive and aroused intense political controversy. In some ways this should not be surprising, since some of the measures adopted by the Congress, two presidents, and the Federal Reserve helped keep solvent some of the financial institutions whose behavior helped cause the recession. However, most of the money actually spent by the federal government was devoted to policies that would have been familiar to presidents and legislators in earlier recessions, regardless of the...

    • Chapter 10 Has the Great Recession Made Americans Stingier?
      (pp. 294-314)
      Rob Reich, Christopher Wimer, Shazad Mohamed and Sharada Jambulapati

      Americans have long been, and continue to be, a particularly charitable people. Whereas Europeans have well-developed and comprehensive welfare states, the United States has always relied more on private charity to support a multitude of causes, including aid and assistance to the poor (Alesina and Glaeser 2004). But how does this proclivity to engage in charity play out during economic downturns? Does it increase as well-off Americans respond to the rising needs that a recession spawns? Or have Americans and American institutions tightened the purse strings during hard times, despite rising needs? In this chapter we examine such questions by...

  9. Index
    (pp. 315-332)