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Financial stress and its physical effects on individuals and communities

  • Economics


Financial Stress and Its Physical Effects on Individuals and Communities Financial Stress and Its Physical Effects On Individuals and Communities Laura Choi Federal Reserve Bank of San Francisco E verywhere you look, the symptoms of the current recession are clear: homes lost to foreclosure, job losses across almost every sector of the economy, dwindling retirement portfolios, and frozen credit markets. But the recession has also led to a number of other symptoms that haven’t been getting enough attention: head- aches, backaches, ulcers, increased blood pressure, depression and anxiety, just to name a few. Extended periods of stress can take their toll on physical, mental, and emotional health, compounding the difficulties that many low- and moderate-income communities face during troubled economic times. As we think about ways to strengthen health and community development finance at the institutional level, we need to remember the impact that financial instability can have on health outcomes at the individual level. The Financial Health of Americans The poet E. E. Cummings summed up the financial condition of many Americans when he said: “I’m living so far beyond my income that we may almost be said to be living apart.” The Federal Reserve estimates total household debt, including mortgage debt, at about $13.7 trillion, or 125 percent of annual after-tax income.1 Many Americans now face perilous balance sheets as household assets began their plunge in 2008. Household net worth fell by $11 trillion in 2008, a decline of 18 percent from the previous year, according to data from the Federal Reserve. Unemployment continues to hover near 10 percent and millions of Americans are expected to exhaust their unemployment-insurance benefits soon. Despite the fact that the Commerce Department announced GDP growth of 2.2 percent in the third quarter of 2009, marking the possible end of the recession, the financial pain lingers and Americans’ debt levels continue to mo

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