The economic trends in June 2022 are not pretty.
The annual inflation rate in the United States is 8.6% for the 12 months ending in May 2022. That’s the largest annual increase since 1981. The S&P 500 is down almost 16% this year, and the Dow has dropped 11.3%. Real gross domestic product decreased at an annual rate of 1.4% in the first quarter of 2022.
The negative economic impacts are hitting New Yorkers in multiple ways, including whether to file for divorce. A hit to the bank account can also drive already-divorced couples to seek modified divorce orders.
Here is an overview of some of the impacts a depressed economy has on divorce.
Divorce Rates Impacted by the Economy
Reviewing historical recessions and depressions offers some insight into how the economy drives the decision to divorce.
During the Great Depression, divorce rates dropped 25% between 1929 and 1933 but then began to rise again. Scholars say the depression delayed divorces but certainly did not ultimately prevent them. Cash-strapped couples might think they cannot afford to divorce.
University of Maryland sociologist Phillip N. Cohen estimates that the Great Recession saw 150,000 fewer divorces than expected between 2009 and 2011. Yet a direct connection between the economy and divorce is difficult to make. Financial struggles exacerbate tension between a couple, but money problems are often not the sole reason a married couple calls it quits.
Decreased Divorce Rates in the COVID Era
Divorce (and marriage) rates dropped significantly during COVID-19’s emergence in 2020. That fact is misleading because many courthouses were closed and conducted only emergency operations. Legal offices were also closed and learning how to navigate a new way to conduct consultations and legal actions.
Some predict pent-up divorce demand will lead to an overall spike in divorce in 2022 and beyond. Other studies suggest that marital commitment and stability increased during the pandemic.
Divorcing in an Economic Downturn
Each couple must look at their specific situation to determine whether they should file for divorce or wait until clearer economic skies return. A benefit of divorcing in a weak stock market means less to divide during equitable distribution. The shares you retain may later rebound in value. If you would be the payor spouse, calculations could mean you pay less in child support or alimony (spousal maintenance) because your income has decreased.
Struggling Economy Can Necessitate Modifying Divorce Orders
Despite steps to buoy businesses crippled by the pandemic response, some companies chose to not reopen their doors or decided to drastically change their business model and reduce their workforce. Many Americans are unemployed or underemployed. Some New Yorkers have also lost loved ones who provided financially for the family. Still, others are saddled with high medical debt.
Anyone who has had a significant change in circumstances will find they need to petition for modifications to orders that mandate child support or alimony payments. The loss of a job, a substantial change in income, and debilitating illness or injury are all possible grounds to lower your monthly support obligation. If one parent is battling a serious illness, custody might also need to be altered.
Legal Guidance for Your Divorce Questions
How the economy affects your marriage and potential divorce is unique to you. There is no template to say when is best to file for divorce. The best thing you can do is to talk with an experienced attorney at Samuelson Hause PLLC. After understanding your financial status, your concerns, and your goals, we can offer intelligent advice gleaned from our many years of handling divorce in New York.
Call (516) 584-4685 to schedule a consultation to learn more about the divorce process or how to modify existing court orders.