Families reeling from pain of recession

There are faint glimmers of hope on the horizon.

The stock market is showing signs of recovery. Economic indicators are turning around. Confidence is growing now that government stimulus efforts are starting to take hold. Low interest rates have sparked a boom in mortgage activity.

But the economy is still hurting. Massive job losses continue, family wealth is a fraction of what it was, credit-card defaults are rising, the housing market continues to sputter, and one in nine mortgages is delinquent or in foreclosure.

Families are still reeling from the pain of the recession, said Christian Weller, senior fellow at the Center for American Progress in Washington.

What does it mean for individual households?

"It means you have less of a buffer if things go wrong," he said. "A lot can go wrong in the current economic environment."

If a family member loses a job in Richmond and gets an offer for one in Boston, for example, he or she may not be able to accept the position because they are upside-down on their mortgage.

During the recession, the family's home value may have declined from, say, $200,000 to $140,000. Yet, the outstanding mortgage balance owed is $160,000.

"You either risk hanging onto the house and renting it out or selling it at a loss," Weller said. "You're going to think twice about taking that job in Boston."

Or perhaps a child just graduated from high school and was accepted into a prestigious out-of-state university and an in-state university.

The family may have to opt for the substantially lower-cost in-state school and let the child commute from home.

Weller said that despite the glimmers of hope, most families remain on the defensive financially.

"How it's going to play itself out, I don't know," he said.