with rising interest rates, resulting in widespread repossession of houses. In addition to declining GDP growth, Mexico experienced severe inflation and extreme poverty skyrocketed as real wages plummeted and unemployment nearly doubled. Prices increased by 35% in 1995. Nominal wages were sustained, but real wages fell by 25-35% over the same year. Unemployment climbed to 7.4% in 1995 from its pre-crisis level of 3.9% in 1994. In the formal sector alone, over one million people lost their jobs and average real wages decreased by 13.5% throughout 1995. Overall household incomes plummeted by 30% in the same year. Mexico's extreme poverty grew to 37% in 1996 from 21% in 1994, undoing the previous ten years of successful poverty reduction initiatives. The nation's poverty levels would not begin returning to normal until 2001. Mexico's growing poverty affected urban areas more intensely than rural areas, in part due to the urban population's sensitivity to labor market volatility and macroeconomic conditions. Urban citizens relied on a healthy labor market, access to credit, and consumer goods. Consumer price inflation and a tightening credit market during the crisis proved challenging for urban workers, while rural households shifted to subsistence agriculture. Mexico's gross income per capita decreased by only 17% in agriculture, contrasted with 48% in the financial sector and 35% in the construction and commerce industries. Average household consumption declined by 15% from 1995 to 1996 with a shift in composition toward essential goods. Households saved less and spent less on healthcare. Expatriates living abroad increased remittances to Mexico, evidenced by average net unilateral transfers doubling between 1994 and 1996. Households' lower demand for primary healthcare led to a 7% hike in mortality rates among infants and children in 1996 (from 5% in 1995). Infant mortality increased until 1997, most dramatically in regions where women had to work as a result of economic need. Critical scholars contend that the 1994 Mexican peso crisis exposed the problems of Mexico’s neoliberal turn to the Washington consensus approach to development. Notably, the crisis revealed the problems of a privatized banking sector within a liberalized yet internationally subordinate economy that is dependent on foreign flows of finance capital. See also Economic history of Mexico 1998 Russian financial crisis Great Recession Index of Mexico-related articles Latin American economy Sudden stop (economics) References Further reading External links Economic Unrest in Mexico from the Dean Peter Krogh Foreign Affairs Digital Archives 1994 in