How Do Economic Downturns Influence Levels of Depression?

Various studies have consistently shown associations between recessions and worsening mental health, as indicated by increased rates of depression.

Economic downturns, including high poverty and unemployment rates, plummeting stock market values, and housing crises, can further exacerbate negative mental health outcomes at the population level, particularly depressive disorders.

Various studies have consistently shown associations between recessions and worsening mental health, as indicated by increased rates of depression, anxiety, alcohol and drug abuse, and suicidal behavior.1,2 As the economy reels from the coronavirus disease 2019 (COVID-19) pandemic, concerns about the mental health ramifications are commonplace.

The Great Recession in the United States that occurred in 2007 to 2009 has been linked with higher rates of adverse mental health outcomes compared to previous recessions and events in other countries. This phenomenon may be partly attributable to widening income gaps in the US, as earlier findings revealed that income inequality may increase the mental health effects of economic downturns.3

Evidence also suggests that women, individuals with lower education and income levels, and those experiencing job instability are especially likely to experience negative mental health outcomes associated with recessions.4,5

“To the extent that these groups overlap with the groups who were more likely to experience hardships during the Great Recession…, vulnerable Americans may have suffered the worst of the adverse effects of recession hardships on mental health,” wrote the authors of a study published in 2019 in Clinical Psychological Science.2

However, much of the research conducted in this area thus far has consisted of aggregate level studies, and there is a dearth of research examining the relationship between mental health changes at the individual level and economic downturns.

In the 2019 study, researchers from the University of Minnesota-Twin Cities in St. Paul and Macquarie University in Sydney, New South Wales, Australia conducted the first known investigation to explore associations between a broad range of financial, job-related, and housing impacts and individual mental health outcomes throughout the Great Recession.2 They used longitudinal survey data (n=2530 to n=3293) collected during the second and third waves of the national Midlife in the United States (MIDUS) study6 to reflect specific time periods (2003-2004 and 2012-2013) before and after the Great Recession.

This data was drawn from telephone interviews assessing clinically significant symptoms of depression, generalized anxiety, and panic, based on the World Health Organization’s Composite International Diagnostic Interview Short Form (CIDI-SF), as well as extensive self-administered questionnaires regarding substance use.

The results demonstrated that each recession impact experienced by an individual was associated with 1.3-1.5 times greater odds of depression after the Great Recession,  as well as anxiety, panic, and substance use problems. Those who experienced 4 or more recession impacts were found to have the highest rates of persistent symptoms and onset of new symptoms for all mental health outcomes with the exception of alcohol use related problems.

However, there was a general improvement in population level mental health over the course of the study, suggesting that the mental health impact of the recession on individuals may be obscured by aggregate level data.

Analysis of the interactions between recession impacts and sociodemographic characteristics revealed 4 significant moderation effects indicating stronger associations between recession impacts and mental health changes in certain groups. Individuals without (vs with) a college-level education were 1.8 (95% CI, 1.31-2.60) times more likely to have generalized anxiety symptoms associated with job-related impacts.

Furthemore, those with greater vs less financial advantage were more likely to have generalized anxiety symptoms associated with housing impacts, with a 1 standard deviation increase in financial advantage linking to 1.3 (95% CI, 1.09-1.50) times higher odds of anxiety symptoms. This group was also more likely to report problematic substance use associated with each financial impact, with a 1 standard deviation increase in financial advantage corresponding to 1.3 (95% CI, 1.14-1.57) times higher odds of substance use issues.

Additionally, individuals who were not married or living with a partner were 1.7 (95% CI, 1.21-2.36) times more likely to report substance use problems that were associated with each housing impact experienced.

“Ultimately, the adverse effects of the Great Recession on individuals’ mental health likely compounded and prolonged its economic costs,” the study authors concluded.2 “These findings thus highlight that government-funded mental health support in future recessions would not only ease individuals’ burdens, but could be a sound financial investment that may act to stimulate faster economic recovery.”

To learn more about these results and related clinical implications, we spoke with study coauthor Miriam K. Forbes, PhD, a senior research fellow at the Centre for Emotional Health in the department of psychology at Macquarie University in Sydney, Australia. The discussed study, however, was conducted while Dr Forbes was completing a postdoctoral fellowship at the University of Minnesota.

What does the available evidence suggest about the relationship between economic crises and depressive disorders and other measures of mental health?

As you might expect, available evidence suggests that economic crises and recessions are associated with higher risk for depressive disorders.

In our research, we found that people who suffered even a single financial, housing, or job-related hardship during the recession were more likely to show increases not only in symptoms of depression, but also in excessive and uncontrollable worry, panic attacks, and harmful drug use. We found these declines in individuals’ mental health several years after the end of the recession, suggesting long lasting effects.

Our research also found that people with less education, people living alone, and people who were financially well off prior to the recession (ie, who experienced hardship that was far removed from their prerecession life) were particularly vulnerable.

What are the implications for addressing these issues in clinical practice?

These results highlight the importance of clinicians being aware of whether and how clients are affected by recession-related hardships, and screening not only for depressive disorders, but also for anxiety and substance use disorders – and even more broadly – in those individuals.

Some individuals – such as those without a safety net, and/or who have experienced multiple types of hardship – may be particularly vulnerable, so ensuring that they have access to appropriate support services will be invaluable for preventing the onset of potentially long lasting declines in mental health.

What is the potential relevance of your findings to the economic downturn related to the COVID-19 pandemic?

The hardships we examined in our research on the Great Recession are the same hardships people are currently facing in the US: financial, housing, and employment insecurity.

Current forecasts also indicate that these hardships are likely to be here to stay on the time scale of years rather than months. Taken together, it is likely we will see similar declines in affected individuals’ mental health.

However, it is important to do new research focused on understanding how our mental health is being affected by the current economic environment and hardships, as the world has changed a lot in the past decade and the context for the current economic downturn may well compound the declines in mental health we observed in our research.


1.     Frasquilho D, Matos MG, Salonna F, et al. Mental health outcomes in times of economic recession: a systematic literature review. BMC Public Health. 2016;16:115.

2.     Forbes MK, Krueger RF. The great recession and mental health in the United States. Clinical Psychological Science. 2019; 7(5):900–913.

3.     Paul KI, Moser K. Unemployment impairs mental health: Meta-analyses. J Vocat Behav. 2009;74(3):264-282.

4.     Glonti K, Gordeev VS, Goryakin Y, et al. A systematic review on health resilience to economic crises. PLoS One. 2015;10(4):e0123117.

5.     Zivin K, Paczkowski M, Galea S. Economic downturns and population mental health: research findings, gaps, challenges and priorities. Psychol Med. 2011;41(7):1343-1348.

6.     Radler BT. The midlife in the United States (MIDUS) series: A national longitudinal study of health and well-being. Open Health Data. 2014;2(1):e3.