The 2008 Recession Affected The Global Economy

1532 WordsJun 16, 20187 Pages
With the after effects of the stock marketing falling in 2008, and less investments involving risk and the GDP falling. This is when the economy began turning internationally. With imports, exports and foreign investment falling along with the combination of employment and production being cut back this recession affected the global economy. The unemployment rate in the United States began to skyrocket as well. Below is a graph depicting the unemployment rate in the United States during the 2008 recession. This graph data is from Oregon Economic Crisis Analysis. With lower rats of employment the United States Federal Reserve needed monetary policy to stimulate the economy. With many individuals loosing their jobs primarily in the…show more content…
household savings increased and spending decreased. Going into 2008, many households could afford to keep debt and manage it because of the good financial indicators. Below is a graph from Creditworthiness showing the U.S. average household debt vs saving leading into the 2008 financial crisis. Most of the debt seen by households was in the form of mortgages, and loans against people’s mortgages. Again with the government regulations and push for more people to own houses, builders to expand their developments and banks to offer subprime loans which lead to competition among banks to lower interest rates, give out adjustable rate mortgages, and even give no income no asset loans, it was easy to get the credit backing from banks and financial institutions for individuals. This increased spending and debt can be contributed to why the economy was looking up for many years, and the economy was booming. However when this uncertainty began to fall, more people pulled out of their personal investments that they considered risk and starting hanging on to their money. Below is a chart from the U.S. Bureau of Economics depicting the household savings before and after 2008. It is important to look at personal savings to see how the money supply could have also affected the economic crisis of 2008, which turned the economy into a recession. With lower money supply in the economy and more in savings because of
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