The Recession Generation


In this Newsweek article http://www.newsweek.com/id/229959 the author explores the impact of the recent financial crisis, the new age of uncertainty, and severe economic downturn on employment and spending patterns.

Some key takeaways:

  • It’s no accident that the psychology of entire generations is shaped by the milieu in which they grew up; economic research tells us that our lifelong behaviors are determined in large part by the seismic events—good or bad—of our youth
  • Even one really tough year experienced in early adulthood is enough to fundamentally change people’s core values and behaviors
  • Recession babies not only invest more conservatively, they tend to make less money, choose safer jobs, and believe in wealth redistribution and more government intervention
  • This division between capital and labor and the permanently high unemployment that it seems to encourage not only depresses wages, it depresses people; a large body of research shows they tend to withdraw from their communities and societies after being laid off (their spooked neighbors, encouraged to work ever harder, do too)
  • Parental unemployment has huge negative consequences for children, making them more likely to fall behind in school, repeat grades, and exhibit anxiety disorders
  • The worry today, say Reich, Soros, and political scientists such as Harvard’s Robert Putnam, is that fearful, vulnerable people will become more easy prey for ugly class politics, being drawn, as Reich puts it, to “populist demagogues on either side of the political spectrum.”
  • Americans generally have a high tolerance for inequality. Yet that tolerance may wane as we enter a new age in which young graduates can’t expect to do better than their parents—and one in which Wall Street is perceived as being able to continue business as usual while Main Street struggles. “Americans are OK with inequality,” says Reich, who believes we are at a tipping point, “as long as they feel the system isn’t rigged.”

All this said, there are some glimmers of hope in the New Normal.

  • Post-crisis, consumers are putting a greater value on time spent with family and friends than on money (a good thing when there’s little of the latter around)
  • There’s also a glimmer of possibility that hard times might make us nicer to each other … simply thinking about money made subjects less sensitive to pain, and less likely to help each other or want to connect with strangers
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  1. #1 by Lillian King at April 28th, 2010

    Our home business was really affected by the Economic recession, we have to cut jobs just to cover up our losses. fortunately, we have already recovered. *

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