"[32], Among the important catalysts of the subprime crisis were the influx of money from the private sector, the banks entering into the mortgage bond market, government policies aimed at expanding homeownership, speculation by many home buyers, and the predatory lending practices of the mortgage lenders, specifically the adjustable-rate mortgage, 2–28 loan, that mortgage lenders sold directly or indirectly via mortgage brokers. [89] Both households and government practicing austerity at the same time was a recipe for a slow recovery. ", CBO Historical Tables-Retrieved March 24, 2018, FRED-All Employees Total Non-Farm-Retrieved January 22, 2018, FRED-Real GDP per Capita-Retrieved January 22, 2018, FRED-Household and Non-Profit Net Worth-Retrieved January 22, 2018, FRED-Federal Surplus or Deficit as Percent GDP-Retrieved January 22, 2018, Federal Reserve Economic Data-Real Median Household Income-Retrieved January 22, 2018, Emmanuel Saez-Striking it richer: The evolution of top incomes in the U.S.-June 30,2016, "Costs for Hospital Stays in the United States, 2012", ProPublica-The Bailout Scorecard-As of January 22, 2018, https://money.cnn.com/2014/08/27/news/economy/ben-bernanke-great-depression/index.html, Office of Federal Housing Enterprise Oversight, Fraud Enforcement and Recovery Act of 2009, Effects of the Great Recession on museums, Federal Reserve v. Investment Co. Institute, https://en.wikipedia.org/w/index.php?title=Great_Recession_in_the_United_States&oldid=985656792, Articles with unsourced statements from September 2008, Articles with unsourced statements from October 2008, Creative Commons Attribution-ShareAlike License. There were a few investment banks, small by current standards, that expanded during the late 1970s, such as JP Morgan. This period of … Beginning in late 2007 and lasting until mid-2009, it was the longest and deepest economic downturn in many countries, including the United States, since the Great Depression (1929– c. 1939).

The economy’s quarterly peak occurred in the fourth quarter of last year, NBER said. [2] It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis. [60] The year also saw the ninth-biggest bankruptcy, with the failure of IndyMac Bank.[61]. A recession informally has been defined as a decline in economic output that lasts at least two quarters. The recession officially ended in the second quarter of 2009,[4] but the nation's economy continued to be described as in an "economic malaise" during the second quarter of 2011. The NBER called the recession just over three months after it began, the fastest such determination since the 1980 recession and far shorter than the typical nine months to a year, says Gregory Daco, chief U.S. economist of Oxford Economics. Major economic downturn in the United States, "Members of the Right tried to blame the seeming market failures on government; in their mind the government effort to push people with low incomes into home ownership was the source of the problem. [95] According to the Federal Reserve, median family net worth had peaked at about $140,000 in 2007, fell to a low point of $84,000 in 2013, and only partially recovered to $97,000 by 2016. While the recession technically lasted from December 2007 – June 2009 (the nominal GDP trough), many important economic variables did not regain pre-recession (November or Q4 2007) levels until 2011–2016.

[90][91][92][93] Real median household income fell to a trough of $53,331 in 2012, but recovered to an all-time high of $59,039 by 2016. [5] Unemployment rose from 4.7% in November 2007 to peak at 10% in October 2009, before returning steadily to 4.7% in May 2016. The recession of 2001 lasted eight months, from March through November of that year. "A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales," NBER said. In mid-March 2008, Bear Stearns was bailed out by a gift of $29 billion non-recourse treasury bill debt assets.

The expansion began in June 2009, ending the …

What Is the Distinction Between a Recession and a Depression? At its peak, in early 2009, total discretionary government spending reached about $1.2 trillion in annual terms, or 7% of the nation’s total Gross Domestic Product (GDP). "[3], According to the Department of Labor, roughly 8.7 million jobs (about 7%) were shed from February 2008 to February 2010, and real GDP contracted by 4.2% between Q4 2007 and Q2 2009, making the Great Recession the worst economic downturn since the Great Depression.
[69][65] The crisis continued when the United States House of Representatives rejected the bill and the Dow Jones took a 777-point plunge. NBER is a nonprofit organization that conducts research on a wide range of economic issues. This time, they happened in different periods because of “the unusual nature of this recession,” NBER said. The GDP bottom, or trough, was reached in the second quarter of 2009 (marking the technical end of the recession, defined as at least two consecutive quarters of declining GDP). How does the length of the Great Recession compare to past downturns? [50] Full-time employment did not regain its pre-crisis level until August 2015. The current downturn, abruptly engineered by the government to curtail the virus, has been so severe that it meets the criteria for a recession, NBER said. In summer 2007, Countrywide Financial drew down an $11 billion line of credit and then secured an additional $12 billion bailout in September.

dollars. Examples of vulnerabilities in the private sector included: financial institution dependence on unstable sources of short-term funding such as repurchase agreements or Repos; deficiencies in corporate risk management; excessive use of leverage (borrowing to invest); and inappropriate usage of derivatives as a tool for taking excessive risks.
According to the Federal Reserve Board, the Great Recession raised the U.S. federal debt and fiscal deficit to record peacetime levels. A timeline of some of the significant events in the crisis from 2007 to 2008 includes: The year 2008, as of September 17, had seen 81 public corporations file for bankruptcy in the United States, already higher than the 78 for all of 2007. [28], In March 2008, financier Warren Buffett stated in a CNBC interview that by a "common sense definition", the U.S. economy was already in a recession. The economy, meanwhile, contracted at a 5% annual rate in the first quarter and is expected to shrink at up to a record 40% rate in the current quarter before mustering a strong rebound in the third quarter. [51], The number of jobs ("total non-farm payrolls" which includes both private sector and government jobs) reached a peak of 138.4 million in January 2008, then fell to a trough (bottom) of 129.7 million in February 2010, a decline of nearly 8.8 million jobs or 6.8%.

A total of $626B was invested, loaned, or granted due to various bailout measures, while $390B had been returned to the Treasury. [4] Real (inflation-adjusted) GDP did not regain its pre-crisis (Q4 2007) peak level until Q3 2011. In truth, the announcement codifies the painfully obvious. What causes a recession and what are the signs?

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