Despite improvement in certain areas of the economy, the Great Recession never truly ended for millions of Americans. Households across the nation are still trying to overcome a sluggish labor market, stagnant wages, and rising living costs. Making matters worse, the struggle does not appear to be ending anytime soon.
The Federal Reserve’s wealth effect is in short supply. According to a new report from the central bank, 25% of American households say their families are “just getting by” financially, and another 13% are “finding it difficult to get by.” Compared to five years earlier, 34% feel like they are worse off today, while the same number feel about the same. Only 30% report that they were somewhat or much better off financially. The survey polled more than 4,100 respondents between September and October last year.
“Many households in the United States have been tested by the Great Recession. Large-scale financial strain at the household level ultimately fed into broader economic challenges for the country, and the completion of the national recovery will ultimately be, in part, a reflection of the well-being of house- holds and consumers,” explains the report.
Let’s take a look at fives signs that Americans are broke and struggling in the current economic environment.
1. Higher education
The cost of obtaining a degree and the associated benefits are making some Americans think twice about the college experience. With soaring tuition prices that regularly outpace other forms of inflation, the days of a degree virtually guaranteeing material wealth early in life are over.
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The University of Arizona released an update earlier this year on its study of a freshmen cohort group — dating back to 2007. More than half the participants — mostly graduates — reported relying on financial support from family to meet current financial demands. Nearly half of those respondents were employed full-time. In fact, as the chart above shows, only 49% of participants reported having full-time jobs after two years of graduation.
“Although a college education has historically been an indication of more career opportunities and higher income, launching a career today is a challenge even for college graduates (Shierholz et al., 2013). Many young adult cohorts who graduate college in weak national economies find themselves taking any job just to pay the bills and may be overqualified for the jobs they take (Kahn, 2010),” explains the report.
Source: USA Today | Eric McWhinnie, Wall St. Cheat Sheet