Weathering the Recession

The Financial Crisis and Family Wealth Changes in Low-Income Neighborhoods

By the Annie E. Casey Foundation

January 1, 2012

Summary

Assets help families meet short-term needs and attain long-term goals, assisting them in weathering financial crises — job loss or unexpected bills — and realizing goals such as owning a home, financing retirement or investing in higher education or a small business. The recent financial crisis has shown both the importance of asset building and that it is by no means a risk-free proposition.

This report sheds more light on how families have fared during the Great Recession, looking more closely at those living in low-income neighborhoods who may see disproportionate effects from the crisis due to targeted subprime lending, less access to traditional credit sources and higher unemployment rates. It uses the variation in household and neighborhood characteristics within and across several low-income neighborhoods that were part of the Foundation’s Making Connections initiative to identify the families most affected by the crisis, and examines the relationship between household and place characteristics and changes in wealth.

Table of Contents

Key Takeaway

Those living in low-income neighborhoods may see disproportionate effects from the crisis due to targeted subprime lending.

This report contributes to the broad understanding of the financial crisis by examining not just the overall local view of changes in wealth, but by using the variation in household and neighborhood characteristics within and across these low-income neighborhoods to identify the families most affected by the crisis. Those living in low-income neighborhoods may see disproportionate effects from the crisis due to targeted subprime lending, less access to traditional credit sources and higher unemployment rates.

Findings & Stats

AECF Weather The Recession 2012 Info1
AECF Weather The Recession 2012 Info5

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