Greg NantzSenior Research Assistant & Publications Coordinator, The Hamilton Project
May 23, 2016
1 min read
Between December 2007 and June 2009 the United States experienced the most severe recession in the postwar period. The over 4 percent decline in gross domestic product (GDP) was only reversed more than three years after the beginning of the recession. During the worst part of the Great Recession, virtually every segment of the U.S. economy was adversely affected. Employment losses were severe, but also unevenly distributed: men, the young, and the less educated suffered disproportionately in the recession’s aftermath.
Fiscal policy is enacted by a country's government through spending and taxes to influence a nation's economic conditions. To help fight a recession, fiscal policy may aim to lower taxes and increase federal spending to increase aggregate demand.
The most severe economic downturn since World War II occurred between December 2007 and June 2009. During this period, hundreds of banks failed, millions of homes went into foreclosure, and Americans lost over $14 trillion in net worth. Unemployment levels swelled from 5% in 2007 to 10% in 2009.
Factors that cause a recession include high interest rates, reduced consumer confidence, and reduced real wages. Effects of a recession include a slump in the stock market, an increase in unemployment, and increases in the national debt.
The American Recovery and Reinvestment Act of 2009 (ARRA) was a major vehicle for such fiscal stimulus, authorizing spending on infrastructure, health care, and education; expanding automatic stabilizers; and making various tax cuts.
Banking regulation has changed over the last 100 years to provide more protection to consumers. You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance.
In all the countries affected by the Great Recession, recovery was slow and uneven, and the broader social consequences of the downturn—including, in the United States, lower fertility rates, historically high levels of student debt, and diminished job prospects among young adults—were expected to linger for many years ...
The major causes of the initial subprime mortgage crisis and the following recession include lax lending standards contributing to the real-estate bubbles that have since burst; U.S. government housing policies; and limited regulation of non-depository financial institutions.
In the United States, the Great Recession was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output.
While the prices of individual items may behave unpredictably due to unexpected economic factors, it is true that a recession might cause the prices of some items to fall. Because a recession means people usually have less disposable income, the demand for many items decreases, causing them to get cheaper.
Recessions have plenty of negative consequences, but they can provide a necessary reset for the markets. Higher interest rates that often coincide with the early stages of a recession provide an advantage to savers, while lower interest rates moving out of a recession can benefit homebuyers.
We find that the impacts of the Great Recession are not uniform across demographic groups and have been felt most strongly for men, black and Hispanic workers, youth, and low-education workers.
Did Anyone Go to Jail for the 2008 Financial Crisis? Kareem Serageldin was the only banker in the United States who was sentenced to jail time for his role in the 2008 financial crisis. He was convicted of hiding losses by mismarking bond prices.
In February 2009, under new President Barack Obama, Congress passed the $789 billion American Recovery and Reinvestment Act, which helped bring about an end to the economic recession.
Economists predict another year of slow growth around the world in 2024. While the risk of a global recession is lower in the year ahead, two G7 economies dipped into recession at the end of 2023.
During a recession, fiscal and monetary policies are used to stimulate the economy. Tools of fiscal policy include increasing government spending and reducing taxes, while tools of monetary policy include lowering interest rates and increasing the money supply.
When the country is in a recession, the appropriate policy is to increase spending, reduce taxes, or both. Such expansionary actions will put more money in the hands of businesses and consumers, encouraging businesses to expand and consumers to buy more goods and services.
Expansionary Fiscal Policy. Expansionary fiscal policy increases the level of aggregate demand, through either increases in government spending or reductions in taxes.
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