Beginning in 2007, the United States, along with most other countries around the world, experienced what has since become the most severe economic downturn since the Great Depression.   In addition to a collapse of the housing market, an epidemic of foreclosures, and a dramatic increase in the unemployment rate, uncertainty is greater than ever before.  News stories about the various causes of the Great Recession, including bank collapses, economic mismanagement, and government bailouts have shaken public confidence in the economy and left countless people fearing for their own financial future. 

One of the most well-known measures of consumer confidence is the national Consumer Sentiment Index (CSI) published monthly by the University of Michigan.  Based on a monthly telephone survey asking people their opinions about a variety of economic subjects, including their own financial well-being, the CSI is considered to be a leading indicator of the general health of the economy and a way of predicting economic recovery.   At the height of the Great Recession in 2009, half of Americans surveyed reported that their financial situation was worse than the year before.   While we have seen a strong recovery since then, confidence is still shaky amid fears of another collapse.

But how has these fears brought on by the Great Recession affected children?   As adults lost their jobs and their homes, the emotional impact this has had on their children is just beginning to be understood.   While there have been numerous research studies looking at the psychological impact of job loss on families, it is far more difficult to measure what happens to children who are affected.    More recent research studies look at the impact of widespread job losses (due to plant closings or business failures in some communities) and later academic achievement in children but fail to examine children directly to determine how they are affected by economic changes. 

Studies investigating how families were affected by the Great Depression of the 1930s led to the development of what would be called the family stress model.  According to Rand Conger of the Center for Poverty Research at the University of California-Davis, poverty can have a devastating impact on families leadinng to emotional problems and family dysfunction.  Along with damaging the relationship between adults, their ability to be effective parents is also compromised.  Children dealing with poverty often experience behaviour problems that their parents are less able to handle due to their own difficulties.  This can lead to strained emotional bonds between parents and children and even incidents of aggression or hostility involving parents and their children or between siblings.

Parents dealing with job loss or other economic hardship often find themselves experiencing greater depression and increased overall stress.  As a result, they are more likely to resort to physical punishments when dealing with children who are more disruptive and less obedient about curfews or other ground rules.  With children, the impact of job loss may depend on how old they are when these economic problems develop.  Both young children and young adolescents seem especially vulnerable to the kind of stress that can come with parents losing their jobs, both directly and indirectly.  Along with financial worries, parental job loss seems directly tied to a child's sense of well-being and how they relate to other children their age.

Research looking at gender differences in how children are affected by economic hardship have yielded mixed results.  Though both boys and girls experience problems,  boys seem more sensitive to economic distress while girls seem more sensitive to resulting issues such as maternal depression and increased fighting between parents.  The emotional impact of a financial crisis also seems to be linked to the structure of the family itself.  Single-parent families can be especially vulnerable because of the economic pressure on single parents when their income is disrupted by job loss (or even potential job loss).  All of which has become more acute in the aftermath of the Great Recession.

A new research study published in the journal Developmental Psychology takes a closer look at how recent economic upheavals have impacted young children.   Conducted by a team of researchers at Columbia University,  the study uses data taken from a unique longitudinal research project to examine emotional and behaviour problems that occur in nine-year-old children affected by the Great Recession.  The Fragile Families and Child Wellbeing Study is jointly run by Princeton and Columbia University and has been following over 5000 children and their parents since 1999.    These children are deemed to be especially vulnerable since two-thirds of them are born to unmarried parents which means greater risk of economic hardship, especially if the sole parent in the household becomes unemployed.  Since the study began before the Great Recession and followed these children for years afterward, this research provides a unique glimpse at the real costs of the recession in terms of the long-term consequences for the children who were affected.

What the researchers found was that economic hardship appears to have a profound impact on children, both in terms of greater risk of emotional problems as well as increased behaviour problems.  Boys in particular seem to be specially vulnerable to developing behaviour problems such as vandalism as well as drug or alcohol problems.   For reasons that are not so clear, girls seem to be more resilient though the uncertainty that often comes with economic hardship can still lead to problems later in  life.  Not surprisingly, children from single-parent families seem more likely to develop substance abuse issues and behaviour problems since they don't have the same degree of social support that may come from married or cohabiting parents.  

Still, there seem to be protective factors that can reduce the impact that uncertainty and poverty can have on children.  Children of single parents (usually mothers) who demonstrate strong maternal warmth and who are more psychologically well-adjusted (i.e., no depression or aggressive parenting) seems less likely to develop problems overall.  These results suggest that single parents who worry about the effect of economic hardship on their children can protect them to some extent through conscientious parenting.   Considering the wide regional variations in terms of how the Great Recession affected families, the researchers admit that their results may not reflect the full impact that economic uncertainty can have even if job loss or foreclosure never occurs.

With an estimated 10 to 17 million children living in poverty in the United States alone, the total proportion of child poverty is far higher than any other developed country according to most international statistics.   While other countries have introduced Child Tax Credits and similar programs to reduce the impact of relative poverty, political objections have blocked attempts to do the same in the United States.   According to Columbia University Jane Waldfogel, one of the current study's authors,  a new initiative to curb child poverty can yield tremendous benefits in preventing children from developing behavioural and substance abuse problems that could cost society far more than what would be spent on a broad child benefit plan.

While the worst of the Great Recession may have passed, its legacy still continues.  As well, new economic downturns will cause further hardship in future and children, who are more vulnerable than most people realize, will face the worst of it.   Even for those children not living in poverty, economic uncertainty poses risks that are only beginning to be appreciated.  Being aware of these risks and the different ways that parents can help protect their children can be essential to avoid long-term problems. 

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