Why folks are feeling down …

Punch line: This has been the most egalitarian of all the 11 recessions since World War II.

In various ways, it has touched every social class through job loss, pay cuts, depressed home values, shrunken stock portfolios, eroded retirement savings, grown children returning home — and anxiety about all of the above.

* * * * *
Excerpted from RCP: The Great Stranglehold, Robert Samuelson, July 12, 2010 

A new study from the Pew Research Center  confirms that Americans have become more frugal and changed life plans:

  • 71 percent say they’re buying less expensive brands
  • 57 percent say they’ve trimmed or eliminated vacations
  • 28 percent of Americans under 65 borrowed money from family or friends
  • 11 percent say they’ve postponed marriage or children
  • 9 percent have moved back with parents.

The economic and spiritual damage extends much further, for many reasons.

First, the huge job loss: By most measures (length of unemployment, permanent firings versus temporary layoffs), joblessness is the worst since World War II.  Younger workers change jobs more often and have higher jobless rates.)

Second, pay cuts: These have affected almost a quarter of workers, including nearly a fifth of those with family incomes exceeding $75,000. Some workers also have had to take unpaid leave or part-time work.

Third, the loss of housing and stock market wealth: This decline (more than 25 percent at its peak on an annual basis) has been concentrated among higher-income Americans, who own a disproportionate share of the wealth. A reverse wealth effect has gripped the upper middle class. Feeling poorer, people saved more and spent less. Their reluctance to make major purchase commitments (a new car or home) validates their pessimism by retarding recovery.

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