Household Sizes Increasing

In Financial Armageddon, I predicted that steadily deteriorating economic circumstances would alter the social landscape in various ways. Among other things, I anticipated that financial and security concerns would lead to increasing household sizes. Based on the following report in USA Today, "More Parents Move In with Kids," it seems like that trend is already underway.

In the 1990s, your family came for dinner. Now they're moving in.

The number of parents, siblings and other relatives who live with adult heads of households grew 42% from 2000 to 2007, according to data released today by the U.S. Census Bureau.

Leading the way: parents, up 67%, to 3.6 million.

The figures suggest it isn't only elderly parents moving in. The number of parents under 65 in these households increased by 75%, and those 65 and older were up 62%. Both groups outpaced the rise in the number of people in family households overall, which is up 6% since 2000.

"This is just a major trend," says Stephanie Coontz, a family history professor at Evergreen State College in Olympia, Wash., who directs research at the Council on Contemporary Families.

Coontz suspects that a host of factors — among them higher housing costs and the USA's struggling economy — are prompting families to combine expenses. Also, intergenerational households are more common among the country's growing number of immigrants, she says.

But Coontz also notes that parent-child relationships are closer now than in the past. The downside, she says, is the emergence of the so-called helicopter parent who may hover too closely, but the upside is a tighter bond between generations and, in many cases, closer friendships between grown children and their parents. "I don't know how many of my students have told me, 'This may sound weird, but I talk to my parents more than I talk to my friends.' "

The average size of both families and households grew from 2000 to 2007, the data show, after shrinking slightly in the 1990s. The average family in 2007 had 3.2 people, up from 3.14 in 2000. The average household, which includes those in which someone lives alone, had 2.61 people in 2007, up from 2.59 in 2000.

Among other factors changing households:

• A 40% increase in the number of other live-in relatives, including the head of household's mother-in-law or father-in-law, to 6.8 million.
• A 24% increase in the number of live-in brothers and sisters, to 3.5 million in 2007.
• An 8% increase in non-relatives, including unmarried partners and roommates, to 6.2 million.

Alaska had the highest percentage change in parents living with householders, up 167%. South Dakota had the lowest, still up 7%.

The Census Bureau's annual American Community Survey collects data from about 3 million U.S. households each year.

Comments

[malabar]

There are a lot of comparisons to the 30s and the Great Depression. Paulson and Bernanke want significant bailouts of Wall Street using scare tactics of Depression and economic collapse and Bill Gross wants the taxpayer backstopping all his investments. Yet, here we are trillions of dollars evaporated in the financial sector and the shadow banking system all frozen. But, the real economy is still hanging in there.

We don't have the major GDP contraction of 30s, significant unemployment nor soup kitchens on every other block. Its surely not Grapes of Wrath!

What's up with this picture? Are the 30s analogies just hype?

[roger]

Hanging in there suggest a statue QO.Life is never static.The financial
Tsunami is just in its first stage.I was impressed by Kunstler statement
that history never repeats itself but rhymes.Tchaikovsky "Pathetic"
would be a very appropriate musical background for to days events

[Walt]

I notice that Tom Scott, CEO of Scott Wealth Management and author of the forthcoming "Fasten Your Financial Seatbelt," made a similar observation that was picked up on MarketWatch last week. Scott, who works at the epicenter of the housing collapse in Orange County, CA noted, "I'm hearing a pattern of stories about people caught short with maxed-out mortgages, big houses that won't sell, and eroding incomes who are throwing in the towel and sharing homes with others."

http://www.marketwatch.com/news/story/new-boomer-retirement-plan-crash/story.aspx?guid={1458087E-2B69-4D89-999B-BDCE8B4D0D16}&dist=hppr&ref=patrick.net

[Boom2Bust.com]

Regarding malabar's comment:

"We don't have the major GDP contraction of 30s, significant unemployment nor soup kitchens on every other block."

malabar- Keep in mind that the "official" GDP and unemployment numbers are very suspect...

"Polyanna Creep"
http://www.boom2bust.com/2008/09/22/pollyanna-creep/

[dearieme]

"What's up with this picture?" Not wrong, malabar, but perhaps premature?

[Al]

dearieme, malabar,

I'm inclined to agree that while things are getting bad, they're not that bad YET. We're certainly not in a depression, but it could be argued that it is inevitable that we will be. It's unfortunate that economists seem to be unable to do anything but point at the present as proof the future will be okay.

[Zack S]

This petition may actually make a difference. It goes to a Senator from VT and is NOT a scam.

http://sanders.senate.gov/petitions/?petition=financial_crisis_1

Dear Secretary Paulson:

As a representative of the Bush Administration, you have proposed a financial bailout program of $700 billion – over $2,000 for every man, woman, and child in the country. We are appalled that your proposal puts the cost of this bailout on average Americans; that it contains no provisions reversing failed deregulatory policies; that it allows executives at these failed institutions to continue to make exorbitant salaries and bonuses, and that your proposal contains no help for average Americans who themselves are facing severe economic hardships.
While the Administration has quickly rallied to help Wall Street, it has ignored the needs of the declining middle class. Since President Bush has been in office the wealthiest people in this country have made out like bandits and have not had it so good since the 1920s. The top one-tenth of one percent now earn more income than the bottom 50 percent of Americans and the top one percent own more wealth than the bottom 90 percent. Incredibly, the richest 400 people in our country saw their wealth increase by $670 billion during the Bush presidency.
Having mismanaged the economy for 8 years while continually insisting that, “The fundamentals of our economy are strong,” the Bush Administration, six weeks before an election, wants the middle class of this country to bail out Wall Street to the tune of one trillion dollars. Meanwhile the wealthiest people, those who have benefited most from Bush’s policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd.
Any plan to clean up the mess on Wall Street must:
Ensure that middle income and working families are not the ones who are paying for this bailout by
Imposing a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue over five years;
Ensuring that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and
Requiring that taxpayers receive equity stakes in the bailed-out companies so that the taxpayers’ assumption of risk is rewarded when companies’ stock goes up.

Taken together these three provisions will substantially reduce the likelihood that this bailout will end up on the backs of average American taxpayers.

Include a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect our must vulnerable families from the very difficult times they are experiencing.

Repeal the disastrous de-regulatory legislation that facilitated this crisis.
End the danger posed by companies that are “too big too fail,” that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up.
In closing, we believe it is appropriate to act quickly to address any systemic danger to our economy. But that does not mean that we need to give a blank check to the financial sector.

Sincerely,
Senator Bernie Sanders
Citizen Co-Signers

[Frank Keegan]

http://www.baltimoreexaminer.com/opinion/Public_pension_panic.html

Public pension panic

By The Baltimore Examiner Newspaper
- 9/21/08

It’s pension panic time. Panic early. Panic often. Demand reform. Public employees must take control of their financial destinies.

Politicians have made promises they never can keep. They and the union bosses who fleece workers don’t have to worry about it because they figured by the time the inexorable mill of reality turns up their deceit, it all will be somebody else’s problem.
They counted on being long gone with millions – maybe billions. Well, the day of reckoning arrived a little earlier than they anticipated.

Why state and municipal workers are not up in arms about it is anybody’s guess, but they and taxpayers must prepare for a battle for survival.

Even before the financial Apocalypse last week, total retirement benefits for Maryland’s public employees were underfunded by at least $45 billion.

If fundamental assumptions about investment returns, economic growth and health care cost inflation turn out to be overly optimistic – gee, what are the odds? – it will be billions worse.

Maryland’s $88 million pension contribution “glitch” discovered last week is just one egregious example. The problem is that every $1 of investment deferred now turns into $5, $10 or more due when an employee retires.

Since 1984, when the Government Accounting Standards Board formed to try to impose at least some appearance of rationality on government delusions, saving pensions has been a high priority.

GASB failed. According to one study released three weeks ago, “The value of pension promises already made by U.S. state governments will grow to approximately $7.9 trillion in 15 years. Adjusting for risk, the true intergenerational transfer is substantially larger. Insuring both taxpayers ... and plan participants ... would cost almost $2 trillion today, even though governments portray state pensions as almost fully funded.”

Guess what? Adjust risk up exponentially as of last week. Underfunding now could turn into an abyss. Market reality is draining the stagnant pond of American high finance, and one of the stinkiest rotting corpses exposed is public pensions.

Baltimore City’s fire and police pension board firing Legg Mason — hired and retained under political pressure from Gov. Martin O’Malley — is just one indicator of how nasty the incest is in public pensions. Politicians and union bosses love the setup because they can rob both workers and taxpayers in the dark.

Public employees must demand accountability. They must scream for reform. They must take control of their destinies. Taxpayers are not going to pick up the tab on this one.

[RBM411]

I read you all the time because there is truth in what you write,but, I really hate the antidotal stuff (love spell check though). Antidotal information put out in papers is fiction meant to sell papers. Statistics are all that will measure your predictions.

[Cate Long]

Although not right for all families for some families combining households could very positive.

In addition to economic benefits there are other advantages.

There are certainly enviromental benefits to keeping fewer households.

There are social benefits for many families. It is often hard for elderly folks who live on their own and are lonely.

Families can share meal preparation and backstop each other for errands, childcare and chores.

Imagine some families do really enjoy each other...