MNeagle
20th September 2010, 09:00 AM
By Phil Izzo
More people are living with family in an effort to deal with the recession, but while the phenomenon is keeping the poverty rate lower, it has wider negative economic consequences.
In a presentation as part of its wider report on income, poverty and health insure, the Census Bureau noted a big jump in the number of individuals and families doubling up. ( See slide 18) The number of multifamily households jumped 11.6% from 2008 to 2010 compared to an increase of just 0.6% in the number of households.
“If the poverty status of related subfamilies were determined by only their own income, their poverty rate would be 44.2%,†David Johnson chief of the Housing and Household Economic Statistics Division at the U.S. Census Bureau said. “When their poverty status is determined based on the resources of all related household members, it is about 17%.â€
This slowing of household formation has been noted elsewhere. Calculated Risk highlights a quote from Time Warner Cable CFO Robert Marcus, who said the company’s “subscriber environment [is] very, very weak,†thanks to high unemployment, high … vacancies and “really anemic new home formation.â€
Fewer households means fewer consumers for businesses desperate for demand. At the same time, it continues to drag on a housing market that needs to burn off excess supply.
Meanwhile, the share of people age 25-34 living with their parents jumped to 13.4% in 2010 from 12.7% in 2008. Families sticking together has likely held down the poverty rate, noted Johnson.
The poverty rate for adults age 25-34 living with their parents was 8.5%, but in that case they are considered part of a household. If their status was determined solely by their own income, 43% were below the poverty threshold for a single person. The struggles of young adults can have a broad economic impact. Parents supporting adult children have less money to spend on themselves, not to mention less income to save for retirement.
To be sure, there is a silver lining if the broader economy can improve. Necessity is likely the primary driver of the increase in multifamily households. Many of these families and children living at home may want to make the jump out on their own as soon as their economic standing improves. That could represent a strong shadow demand for housing, as well as a potential jump in household formation with a resultant boost in consumption.
http://blogs.wsj.com/economics/2010/09/16/the-downside-of-families-doubling-up/
More people are living with family in an effort to deal with the recession, but while the phenomenon is keeping the poverty rate lower, it has wider negative economic consequences.
In a presentation as part of its wider report on income, poverty and health insure, the Census Bureau noted a big jump in the number of individuals and families doubling up. ( See slide 18) The number of multifamily households jumped 11.6% from 2008 to 2010 compared to an increase of just 0.6% in the number of households.
“If the poverty status of related subfamilies were determined by only their own income, their poverty rate would be 44.2%,†David Johnson chief of the Housing and Household Economic Statistics Division at the U.S. Census Bureau said. “When their poverty status is determined based on the resources of all related household members, it is about 17%.â€
This slowing of household formation has been noted elsewhere. Calculated Risk highlights a quote from Time Warner Cable CFO Robert Marcus, who said the company’s “subscriber environment [is] very, very weak,†thanks to high unemployment, high … vacancies and “really anemic new home formation.â€
Fewer households means fewer consumers for businesses desperate for demand. At the same time, it continues to drag on a housing market that needs to burn off excess supply.
Meanwhile, the share of people age 25-34 living with their parents jumped to 13.4% in 2010 from 12.7% in 2008. Families sticking together has likely held down the poverty rate, noted Johnson.
The poverty rate for adults age 25-34 living with their parents was 8.5%, but in that case they are considered part of a household. If their status was determined solely by their own income, 43% were below the poverty threshold for a single person. The struggles of young adults can have a broad economic impact. Parents supporting adult children have less money to spend on themselves, not to mention less income to save for retirement.
To be sure, there is a silver lining if the broader economy can improve. Necessity is likely the primary driver of the increase in multifamily households. Many of these families and children living at home may want to make the jump out on their own as soon as their economic standing improves. That could represent a strong shadow demand for housing, as well as a potential jump in household formation with a resultant boost in consumption.
http://blogs.wsj.com/economics/2010/09/16/the-downside-of-families-doubling-up/