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Study: More than half of Americans feel negative financial impacts from recession

By Stephanie Chen, CNN
More than 55 percent of Americans are feeling the impact of unemployment or wage cuts during the recession, a study says.
More than 55 percent of Americans are feeling the impact of unemployment or wage cuts during the recession, a study says.
STORY HIGHLIGHTS
  • Report: More than 55 percent of U.S. adults feeling impact of unemployment, wage reductions
  • The length of unemployment has surged to an average of six months, study says
  • Study found household values and savings have dropped since the recession began
  • Survey interviewed 3,000 U.S. adults by telephone in May 2010
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(CNN) -- Before the economic recession hit in 2007, Lana Melnik was a college counselor at Northeastern University in Massachusetts guiding hundreds of students towards employment.

Now, at 57, she's been laid off from her school, and she is taking temporary stints as a substitute teacher until she secures a full-time job.

"My friends are asking me, "How are you still managing?" Melnik said. "I tell them I'm still standing."

And she's not alone.

More than 55 percent of adults in the U.S. labor force are feeling the impact of unemployment or wage and work hour reductions since the economic downturn began 2 ½ years ago, according to a broad report from the Pew Research Center's Social and Demographic Trends Project.

"This recession has left a mark on a lot of things," says Paul Taylor, project director at the Pew Research Center. "It's changed behaviors and it's changed expectations."

The study, which is based on the interviews of 3,000 Americans by telephone in May and on federal economic and demographic data, found the economy is taking a financial toll on many American families. The length of unemployment has surged, averaging about six months, the report said. This six-month period surpasses the previous record average length of unemployment in the 1982 to 1983 recession, which was about three months.

Read about the stigma of unemployment

Shrinking and disappearing paychecks have put strains on family finances. One out of two adults surveyed said their finances are suffering more since the recession started, the study said. Only 20 percent say they are in better financial shape since the recession began.

With less disposable income, the recession has caused American families to rethink their spending habits, the study finds. About six out of ten Americans reported tightening their spending habits. About a third surveyed said they will continue being frugal with expenses even when the recession is over. But a majority say they plan to revert to their pre-recession spending habits.

And if American families are looking to find money in their homes, they are likely to find bad news in the short term. About 48 percent of homeowners surveyed said the value of their home dropped during the recession. Of those who believe their house is worth less, nearly half believe it will take three to five years for the value of their home to recover from the recession.

But despite the shrinking value, the vast majority of those polled say owning a home is the best long term investment.

The groups taking the biggest hit from the economic downturn -- blacks and young adults -- are more upbeat about a recovery than are whites and older adults. The survey also found Democrats to have a more positive view than Republicans.

Retirement is a vexing issue for many Americans, who have dipped into their savings and assets to survive, Pew Center experts said. About 32 percent of adults fear they will not have enough money to retire, an increase from 25 percent in February 2009.

The survey also posed an long-term question to the adults about the future of their children. About 25 percent surveyed said they think their children will have a worse standard of living than they experienced, up from ten percent of Americans expressing that view a decade ago. However, blacks, Hispanics and young adults hold a more positive view of intergenerational progress than whites and older adults.

Other findings of the study are encouraging, Pew researchers point out. About 62 percent of Americans believe their personal finances will improve in the coming year.

 
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