As more and more people are laid off poverty levels are rising worldwide. The United Nations estimates that 90 million additional people have been pushed into poverty due to the global economic recession. Developed and developing nations alike have been hurt by slowing industrial output, weakness in job market and lower demand for foods and services.
A recession is defined as two or more quarters of negative growth in Gross Domestic Product (GDP). The current recession is far more severe then the past recessions of 1973, 1981, 1990 or 2000. Those were relatively short recessions with none lasting greater then 16 months. This economic downturn has lasted over 20 months which is far longer then any other economic crisis in US history since the Great Depression.
In the United States unemployment has risen to 9.5% and is expected to break double digits later this year. The unemployment rate is even higher among minorities. Some economists estimate that the unemployment rate may get as high as 12%. States such as California have even worse numbers then the national average.
According to Marketwatch, “The poverty rate is projected to reach 18.5 percent in Los Angeles, with nearly 2 million people in poverty and 17 percent in California, with nearly 6.7 million people in poverty.” More Americans are applying for unemployment benefits, food stamps and housing aid. Some of the problems associated with poverty are a lack of adequate healthcare, lack of educational achievement and rising crime rates. This is bad news for a governmental system already strained by rising social security and medical costs amidst an increasing baby boomer population.
The poverty problem is not specific to North America alone. Even developed countries like Japan have seen a surge in elderly crime. The elderly have resorted to shoplifting and stealing to make up for declining incomes. Almost 20% of all crimes committed in Japan last year were by adults over 60. Poverty rates have grown in Europe as well. In London alone almost 40% of children, 25% of adults of working age, and 20% of senior citizens currently live in what is classified as a low income household.
Emerging markets have not been spared the effects of the recession. They have been hit the hardest as private capital and job investment has all but dried up. Russia, Eastern Europe and sub-Saharan Africa have seen their economies come to a grinding halt. There is some good news however. Brazil, India and China have been far more resilient then smaller developing countries. Brazil and India were able to avoid investing in many of the toxic assets that crippled the financial system. China was helped by its domestic savings and was one of the first countries to adopt a domestic stimulus package.