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High divorce rates and household creation tied to economic growth

New statistical research shows that the U.S. divorce rate has dropped during the currently tumultuous economic climate. According to data from the federal government, there were 3.6 divorces per 1,000 people in 2007. Two years later, that rate dropped to 3.4 divorces per 1,000 people. A researcher at the Roosevelt Institute also found that between 2005 and 2009, states experienced a dip in their divorce rate when unemployment increased.

Another factor in the relationship between divorce and the economy is "household formation." Most of the time, a country has fewer households than it has people. Both the number of households and the number of people grow at similar rates, but since 2007 household creation has ceased in the U.S.

There are two reasons for this phenomenon. Part of the household stagnation is caused by the lack of job opportunities for younger adults. Without the means to completely support themselves, these young adults live with their parents, creating a "double up" for that household.

The other reason for household creation slowing is the decrease in divorce. When the divorce rate is low, it means more people are staying together under the same roof. In other words, divorce promotes household creation. As a side effect of household creation, national income gets a boost and the economy does a little better.

The decrease in divorce and its correlation to household creation is not uncommon during a recession. After all, it is easier to live with other people. By having a spouse or roommate live with you, it splits the costs of living and increases the amount of resources available. Simply put, it is a more fiscally-friendly way of living than having a place to yourself.

There are signs that the economy is on the rise, and if so, divorce rates and household creation will probably share in that growth.

Source: Slate, "Help America: Get Divorced!" Matthew Yglesias, Jan. 31, 2012

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