The third quarter of 2018 marked the 10-year anniversary of an American financial crisis that sent markets into a freefall and shook the very foundations of the U.S. and global economies. A decade later, despite record stock market gains and steady economic growth many Americans are still feeling its effects--especially those we call the New Middle Class


Misconceptions persist about the underlying causes of the 2008 crisis and subsequent recession. While some pundits and journalists blamed the crisis on consumers for taking out and then defaulting on mortgages for homes they couldn’t afford, most economists and experts point to a number of contributing factors: the burst of the housing bubble, bad bets on Wall Street, deregulation of the financial system, mortgage fraud, and other events in a complex series that ultimately led to the largest single-day point drop in the history of the Dow Jones Industrial Average (at the time) and the brutal recession that followed.


In the decade since the crisis, our financial system has stabilized and recovered. The rebound, however, did not necessarily alleviate the lingering effects of the crisis for many middle class Americans--especially when it comes to credit. According to the Urban Institute, 16 percent of consumers with credit records acquired a blemish (such as a foreclosure, bankruptcy, civil judgment or federal tax lien) on their record between 2004 and 2015. These adverse events can result in long-term effects on Americans’ personal finances, as evidenced by CNMC research:


  • In a survey of non-prime Americans (those with credit scores below 700), 69% could not cover an urgent $500 expense with their savings.
  • 72% of non-prime Americans would not be able to put $500 on a credit card; 80% would not be able to put $2000 on a card (source: Limited Options for Borrowing: The Non-prime Experience).
  • Non-prime Americans were also six times more likely to have been denied a job in the prior 12 months because of low credit;
  • And 12 times more likely to have been denied an apartment in the prior 12 months because of low credit (source: Non-prime Americans: The Hidden Cost of Being Non-prime).


Between these long-term credit ramifications and uneven exposure to stock market gains (The New York Times reports that only about half of American households have any exposure to the stock market), recovery has been slow for members of the New Middle Class. Thirty-eight percent of Americans with non-prime credit scores indicate their current financial situation is worse than when they grew up, compared to only 25 percent of those with prime scores. Non-prime Americans are also watching their finances much more closely: they check their bank account balances 50 percent more often and their credit scores 40 percent more often than their prime counterparts.

A decade later, thousands of Americans are still feeling the effects of the 2008 financial crisis. The Great Recession may officially be over, but for members  of the New Middle Class the pain has often persisted.