Now that the recession has ended, the divorce rate is back on the rise. The number of Americans getting divorces rose for the third year in a row to about 2.4 million in 2012, according to census data. The divorce rate had plunged to a 40-year low in 2009.
“Whatever the social and emotional impact, the broad economic effects of the increase are clear: It is contributing to the formation of new households; boosting demand for housing, appliances, and furnishings; and spurring the economy,” Bloomberg News reports.
“As the economy normalizes, so too do family dynamics,” says Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pa. “Birth rates and divorce rates are rising. We may even see them rise strongly in the next couple of years, as households who put off these life-changing events decide to act.”
The rise in divorces has coincided with a rise in household formation. While divorces aren’t the sole contributor to the rise, nearly 5.3 million households have been formed in the past four years, after dropping to fewer than 400,000 in 2009, according to Census Bureau data.
“Separations and divorce often create additional housing demand by creating two households when there was one,” says David Crowe, chief economist at the National Association of Home Builders in Washington.
Rising home prices may give couples greater financial security to proceed with a divorce.
“Home prices are going up [and] many people who were postponing their divorce might start thinking about it,” says Abdur Chowdhury, a professor at Marquette University in Milwaukee and an adviser to the Federal Reserve Bank of Chicago, who published a paper in July 2011 that examined the impact of recessions on divorce. “In many cases after divorce, people sell their homes and divide up the proceeds.” That provides “each of them with a nest egg to begin their separate lives.”
Source: “With the Economy Improving, More Americans Are Getting Divorced,” Bloomberg News (Feb. 25, 2014)
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