Around 70% of economists say that an economic recession is in the near future. Some say we’re already seeing the initial effects of this now, with over 150,000 tech workers being laid off in the first half of 2023.
Economic recessions are life-altering events for most people. Many of us have already felt the financial impacts of previous recessions in our lifetimes. But what about the psychological effects of these recessions? How do these periods of economic instability affect mental health, both individually and as a whole?
What is a recession, and what causes it?
Although there is no official definition of an economic recession, it’s generally described as any period with an economic downturn, evidenced by a reduction in GDP (gross domestic product) in two successive quarters. Recessions can be caused by many different factors, including stock market crashes, changes in prices of things needed to produce goods (like oil), and fiscal policies designed to combat inflation.
What are some examples of recessions?
There have been many global and U.S. recessions in the last century, including:
- The Great Depression (1929 to 1933): Considered the most significant recession in U.S. history, it started when the stock market crashed on “Black Tuesday” in October 1929.
- 1973 Oil Crisis (1973 to 1975): Caused by a combination of OPEC quadrupling oil prices and the stock market crash of 1973.
- The Great Recession (2007 to 2009): The worst recession since the Great Depression led to the collapse of many important financial institutions.
- COVID-19 recession: Although it may have seemed like this recession went on for a long time due to its severity, it was one of the shortest economic recessions, lasting only two months.
Impacts of recessions: How does the economy affect mental health?
Studies and reviews are nearly unanimous in their findings that economic recessions have an enormous impact on societal mental health.
Rates of mental health problems tend to skyrocket during economic recessions, and studies have found the risk of mental health problems like depression, anxiety, and substance use disorder increased around 1.5 times during the Great Recession of 2008.
Unfortunately, the most vulnerable populations – including people of lower socio-economic status, BIPOC, older adults, people with pre-existing mental illness, and women – tend to get hit the hardest.
Recessions have been found to increase mental health problems in the following areas:
One analysis of multiple reviews found rates of depression went up over the developed world during the 2008 global recession. Mental health visits during the recession decreased overall but increased for specific groups, including women and older adults. Interestingly, those with higher incomes and better healthcare access also experienced an increase in mental health visits, pointing to need, not just access or lack thereof, as factors during the recession.
Men seem more vulnerable to the effects of recessions (and unemployment in particular) on mood and are more likely to become depressed during an economic downturn.
Some specific factors that significantly raised depression rates during past recessions included:
- Loss of employment
- Job insecurity
- Housing instability
- Mortgage payment difficulties or being behind on rent
- Financial distress
The relationship between anxiety and recessions, at least in the U.S., is a bit more complex. Some studies have shown no correlation or even a negative correlation between anxiety and recessions for U.S. and Canadian adults. In other words, they showed anxiety levels overall stayed the same or went down during periods of recession.
However, there were some studies showing workers, in particular, did experience greater levels of anxiety during some recessions. For example, one study showed people who experienced financial strain during a recession – for example, job loss, housing instability, or decrease in income – were more likely to experience symptoms of generalized anxiety disorder or panic attacks.
This makes sense; losing your job or being unable to afford housing are extremely stressful life experiences. And research also tells us that increased stress makes us more vulnerable to developing an anxiety disorder.
More people die from suicide during economic recessions. And it isn’t just a recent phenomenon – reports from the Great Depression show suicide rates increased by over 22% between 1928 and 1932.
Research from the more recent Great Recession has had similar findings. Although the suicide death rate was steadily increasing before this recession, it started to accelerate over three times faster during and directly after the financial crisis of 2008. There were over 4500 excess suicide deaths during this period, which could be linked to the recession.
One review that compiled results of 48 studies (conducted across different countries in the Americas, Europe, and Asia) found in almost every country, suicide rates rise with every period of economic recession.
One of the factors most significantly tied to suicide rates was individual (not national) unemployment. In other words, the country’s overall unemployment rate wasn’t linked to a higher national suicide rate. Still, if you lost your job during a recession, then you were more likely to think about suicide. Foreclosures were also highly linked to the risk of suicide.
Self-harm, clinically referred to as non-suicidal self-injurious behavior, is any sort of behavior you do to hurt yourself, but without the intention of ending your life. For example, people may self-harm by cutting, picking, or biting their skin or banging their heads.
Almost every study examining the relationship between economic recessions and self-harm behaviors has found that self-harm behaviors go up during periods of financial difficulty.
For example, one Irish study found rates of self-harm were much higher during the 2008 recession than in times when the economy was stable. This meant there were nearly 9,000 excess hospital visits for self-harm than would have been expected if pre-recession patterns had continued.
Substance use disorder
Research has also found economic recessions can cause problematic substance use to go up, including
- Alcohol-related suicide deaths
- Opioid abuse
- Opioid deaths and emergency room visits
- Teen substance use
- Prescription painkiller abuse
In one study, most of the participants said they used drugs more frequently during the recession because they had more free time. People could also become more likely to use drugs and alcohol as a way to cope with the emotional distress that can come along with unemployment and financial problems.
Recessions and mental health: A two-way relationship
Not only can recessions cause an overall decrease in public mental health, but people who already struggle with mental health conditions may be more vulnerable to the adverse effects of a recession.
One study examined the effects of the 2008 recession across 27 different European countries. As it is, people with mental health concerns are more likely to be unemployed than people without these issues (during a healthy economy). The researchers found the unemployment gap between people with and without mental health problems got even wider during and directly after the recession.
The gap was even more comprehensive in countries with a high stigma against people with mental illness (where a more significant majority of the population felt people with mental illness are dangerous). Young people, males, and people with lower education levels were also more vulnerable.
Economic recessions have shown an ability to make people with mental illness even more marginalized than they already are. This is a legitimate concern because people with mental health struggles could find themselves caught in a vicious cycle. For example, unemployment could make their mental health symptoms worse, but living with a mental health condition could make it harder to find a job, and so on.
How to protect your mental health during a recession
Although many of our financial situations may be out of our control in a recession, fortunately, there are things you can do to protect your mental health.
Seek social support
Here’s an evidence-backed tip: having strong social support can protect you against the negative mental health effects of an economic downturn. Reach out to loved ones, and work on developing deep relationships you can count on during hardship.
Accept your feelings
Recessions are one of the most challenging societal events to live through. Things like losing your job, getting evicted, and not being able to pay the bills are understandably stressful and anxiety-inducing. Allow yourself to feel how you feel about the situation – pushing feelings away may only make them stronger.
Be careful of catastrophizing
It’s one thing to try to prepare yourself for a change in your financial situation – it’s another to automatically jump to the worst-case scenario, also known as catastrophizing. For example, we don’t know whether a recession is coming, and even if one does, it could be just a blip. It’s understandable to want to prepare, but don’t agonize yourself by stressing about the future.
Focus on your situation
It’s easy to get sucked into news and national reports. But remember that individual circumstances are the most likely to predict mental health outcomes, and everyone’s situation is different. Try to draw your focus away from what’s happening with others around the country (see: recent tech layoffs), and keep your mind on how you are doing. Are you employed? Are you eligible for unemployment benefits? Do you have secure housing?
It’s normal to have anxiety about possible recessions, and professional mental health care can help. Seeking treatment now can make sure you’re in a healthy mental space if the economy takes a hit in the future.
The Center • A Place of HOPE uses a unique Whole Person Care approach to mental health treatment. This means we consider every aspect of your well-being – mental, physical, spiritual, social, and financial. If your financial situation has impacted your mental health, we want to help you recover on every level.
We also have a special program for high-profile, high-net-worth individuals who require privacy and security.
Call us for more information on admissions, insurance, and finances.
1 – https://www.bloomberg.com/news/articles/2022-12-20/economists-place-70-chance-for-us-recession-in-2023
2 – https://www.imf.org/external/pubs/ft/fandd/2009/03/pdf/basics.pdf
3 – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7413622/
4 – https://www.mdpi.com/2076-328X/11/9/119
5 – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3093269/
6 – https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(12)61910-2/fulltext
7 – https://pubmed.ncbi.nlm.nih.gov/26082406/
8 – https://www.sciencedirect.com/science/article/abs/pii/S001429212100221X
9 – https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-016-2720-y
10 – https://pubmed.ncbi.nlm.nih.gov/29643264/
11 – https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0069792