Causes Of The Great Recession

First, we need to understand how the Great Recession occurred. It all started with President Ronald Reagan in the 1980s. Reagan was famous for his supply-side economic views (Amadeo 1). He used top-down economics meaning he used government intervention to give businesses tax breaks and subsidies to create economic growth. With this he also started a continuing phenomenon to deregulate Wall Street. He believed this would create vast economic growth and it did. But it created a bubble and it

The recession of 2008 is also called the ‘Great Recession’, said to have begun in December 2007, and took a turn for the worse in September 2008, and it was a severe economic problem expanded globally. This recession affected the world economy, and is said to have been the worst financial disaster since the Great Depression. The decline in the Dow Jones this time was -53.8%. Since the official start of the recession in December 2007, and through June 2010 there have been about 2.3 million homes foreclosed in the United States. In 2012, the state with the most foreclosures in January alone was California, with 51,584 houses being repossessed. Unemployment during this collapse was 8.5%, and continued to increase to about 10% as of 2010. People’s reaction to this recession was a huge decrease in spending and borrowing from banks, but an increase in saving.

The Great Recession was a terrible event, but it eventually had a positive effect on my life. My parents have told me to always be aware of the general state of America’s economy because of the events from 2007 to 2009. I have learned so much about the stock market and the economy, mostly at the dinner table, from diagrams made with napkins and glasses on the while my brother and I ate our

Firstly, we learned that the most significant cause of the Great Recession was the collapse of an unstable housing market. “The Great Recession began with the bursting of an 8 trillion dollar housing bubble. The resulting loss of wealth led to sharp cutbacks in consumer spending. This…

Everybody in the United Stated was affected by the recession that began in December of 2007 and spanned all the way to June 2009. Even though the recession is over, many people are still being affected by it and have still not been able to recover from the great recession. “The recent recession features the largest decline in output, consumption, and investment, and the largest increase in unemployment, of any post-war recession”. Many people lost their jobs due to the recession and some of them are still having a hard time finding jobs and getting back on their feet. Businesses

The Financial crisis has its roots in real estate and the famous sub-prime lending crisis. In 1990, during president Bill Clinton administration, Commercial banks and residential properties witnessed their values increase for almost a decade. Increases in the house market coincide with the lowering of interest rate and lending standards to unqualified borrowers accepting them to take out mortgages whereas at the same time the government deregulations mixed the lines between traditional financial institutions and mortgages lenders. The real estate loans were distributing through out the financial & Banking system in the shape of CDOs and other complex derivatives in order to scatter or spread the risk; however, when home values stopped to rise and homeowners flopped to keep up with their payments and banks were forced to foreclosure their homes.

The recession is said to have started in December of 2007 and officially ended in June of 2009 (Rich, 2013). What made the Great Recession notable from other previous economic downturns in the United States besides it length was the depth of the recession. The United States’ gross domestic product (GDP) fell 4.3 percent from its peak in the fourth quarter of 2007 to its trough in the second quarter of 2009 (Rich, 2014). In addition, the unemployment rate in the United States was around 4.6 percent in 2006 and 2007 and peaked at 9.6 percent just a few years later in 2010 (U.S. Bureau of Labor Statistics,

The 2008 so called “Great Recession” was a time that was tough on a great deal of americans as well as people all around of the world. The shock was the popping of the housing bubble. After the great burst, the financial situation of the country began to spiral out of control. Unemployment skyrocketed. Millions of Americans were laid off. The inflation rate plummeted to an extremely unhealthy amount. This was strange because the United States had recently spent decades working to lower inflation rate. They finally received what they wanted and much more. The consumer price index also eventually crashed as well. A big reason for these crashes were civilian reactions to the bursted housing bubbles. The United States took several actions to recover from the crisis. They worked at lowering mortgage interest rates and also passed the American Recovery and Reinvestment Act. They also bailed out huge failing banks like AIG. We took many actions that eventually paid off and pulled us out of the recession.

The U.S. experienced a significant economic decline in December 2007. This was the Great Recession. A recession is a huge drop in consumer spending that has a chain reaction of job lose, and lower business income. It can be caused by an economic shock. And economic shock is when products are priced more than their value. 8.8 million Jobs were lost within 2 years, February 2008-2010. Unemployment was nearly 10% in October of 2010. Since 2012, GDP and employment has made a very slow growth rate. The poverty rate increased to 12.5 % in 2007.

With the burst of the dotcom bubble mentioned above and also the terrorist attacks of 9/11/2001, the United States experienced a short period of recession. In order to combat this, the Federal Reserve proceeded to lower the Federal funds rate eleven times in a span of a year and a half bringing the rate from 6.5% in May 2000 to 1.75% in December 2001. This constant lowering brought a rush of liquidity in to the transitioning economy. This form of cheap money was immediately taken advantage of by bankers and then subprime borrowers; those that had little to no income, jobless, and lacked assets. These subprime borrowers used these new funds to purchase homes causing a spike in the housing market bringing more loans, more buyers and greater home values. This soon caught the attention of the Fed.

As the government continued to push homeownership during the 90s to the 2000s, banks began giving mortgage loans to people who had medium to no credit scores at a higher-interest-rate; making it a high risk investment for the economy to produce more consumer spending.

The Great Recession happened around 2008 and lasted throughout 2010. It resulted in job losses, unemployment and underemployment, falling income and a rise in poverty and lastly, a collapse in the real estate market for mortgages. A recession is defined as when a country experiences two or more quarters of contraction in their economy. During this time, the interest rates were lowered so it was easy and cheap for people to get money. Cheap money encouraged people to spend in order to help the economy grow, but people got careless with the low interest rates so they started over spending more than they needed and that alone, along with the negative savings rate, lead to the recession in America.

The Great recession in 2008 was the worst recession since the Great Depression. The bursting of an eight trillion dollar housing bubble started it but at the same time lead to a loss in business investment. It was also caused by a stock market crash and bad loan that caused many people to lose some of their family wealth dramatically. The Great Depression had a four percent fall in domestic gross product and the unemployment rose to ten percent. The Great Recession also leads to the largest expansion and a two-thirds tax cut.

From 2001, Federal Reserve began to cut interest rates, and after cutting for 13 times, by june.2003, it reduced target rate to 1% which hit the lowest level in the past 46 years. Due to such loose monetary policy, lending rates declined at the same time, 30-year fixed mortgage rates dropped from 8.1%in 2000 to 5.8% in 2003. In this case, Americans’ house purchasing enthusiasm rose dramatically. And speculating on real estate appeared. However bubble would burst eventually. From june.2005, Federal Reserve began to reserve its low interest rate policy, and raised its interest rates for 13 times, so by august.2006, Fed target rate was increased from 1% to 5.25%. The interest rates were put up continuously, which increased borrowing

The historical event known as the Great Recession lasted from December 2007 until June 2009, and the extent of the economic damage significantly affected the labor market and the living standards of low-and-moderate income Americans. The United States has avoided another recession due to accommodate federal fiscal