Great Recession

The International Monetary Fund (IMF) has concluded that it was the most severe economic and financial meltdown since the Great Depression and it is often regarded as the 2nd worst downturn of all time.

By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession.

Underlying narratives #1-3 is a hypothesis that growing income inequality and wage stagnation encouraged families to increase their household debt to maintain their desired living standard, fueling the bubble.

After falling somewhat due to the Great Recession in 2008 and 2009, inequality rose again during the economic recovery, a typical pattern historically.

The recession was not felt equally around the world; whereas most of the world's developed economies, particularly in North America, South America and Europe, fell into a definitive recession, many more recently developed economies suffered far less impact, particularly China, India and Poland, whose economies grew substantially during this period. By 2007, real estate bubbles were still under way in many parts of the world, especially in the United States, France, United Kingdom, Spain, The Netherlands, Australia, United Arab Emirates, New Zealand, Ireland, Poland, South Africa, Greece, Bulgaria, Croatia, Norway, Singapore, South Korea, Sweden, Finland, Argentina, Baltic states, India, Romania, Ukraine, and China.

Living standards continued to improve rapidly despite the late-2000s recession, but political control remained tight.

Underlying narratives #1-3 is a hypothesis that growing income inequality and wage stagnation encouraged families to increase their household debt to maintain their desired living standard, fueling the bubble. Income inequality in the United States had grown from 2005 to 2012 in more than two-thirds of metropolitan areas.

Inequality steadily increased from around 1979 to 2007, with a small reduction thereafter due to a combination of the Great Recession and higher income taxes on the top 1% under President Obama.

The Great Recession met the IMF criteria for being a global recession only in the single calendar year 2009.

The 2009 global recession, also known as the Great Recession, was by far the worst of the four postwar recessions, both in terms of the number of countries affected and the decline in real World GDP per capita.

Despite the fact that quarterly data are being used as recession definition criteria by all G20 members, representing 85% of the world GDP, the International Monetary Fund (IMF) has decided—in the absence of a complete data set—not to declare/measure global recessions according to quarterly GDP data.

On 11 October 2008 after a meeting of G7 finance ministers, US President George W. Bush stated that the next meeting of the G20 would be important in finding solutions to the burgeoning economic crisis of 2008.

Two senses of the word "recession" exist: one sense referring broadly to "a period of reduced economic activity" and ongoing hardship; and the more precise sense used in economics, which is defined operationally, referring specifically to the contraction phase of a business cycle, with two or more consecutive quarters of GDP contraction (negative GDP growth rate).

This was particularly true during the Golden Age of Capitalism (1945/50–1970s), and the period 1945–2008 did not experience a global downturn until the Late-2000s recession.

The U.S. economy experienced a serious economic downturn during the Great Recession, defined as lasting from December 2007 to June 2009.

A 2009 paper identifies twelve economists and commentators who, between 2000 and 2006, predicted a recession based on the collapse of the then-booming housing market in the United States: Dean Baker, Wynne Godley, Fred Harrison, Michael Hudson, Eric Janszen, Med Jones Steve Keen, Jakob Brøchner Madsen, Jens Kjaer Sørensen, Kurt Richebächer, Nouriel Roubini, Peter Schiff, and Robert Shiller.,

Med Jones is one of few economists who predicted the Great Recession of 2008 caused by the burst of the United States housing bubble, the Subprime mortgage crisis and the financial crisis of 2007–2008

The recession was not felt equally around the world; whereas most of the world's developed economies, particularly in North America, South America and Europe, fell into a definitive recession, many more recently developed economies suffered far less impact, particularly China, India and Poland, whose economies grew substantially during this period.

Having a strong domestic market, low private debt, low unemployment rate, flexible currency, and not being dependent on a single export sector, Poland is the only European economy to have avoided the recession of 2008.

Economist Paul Krugman once commented on this as seemingly the beginning of "a second Great Depression".

Krugman has since drawn parallels between Japan's 'lost decade' and the late 2000s recession, arguing that expansionary fiscal policy is necessary as the major industrialized economies are mired in a liquidity trap.

Examples include the Great Depression and The Great Recession.

In his separate dissent to the majority and minority opinions of the FCIC, Commissioner Peter J. Wallison of the American Enterprise Institute (AEI) primarily blamed U.S. housing policy, including the actions of Fannie & Freddie, for the crisis.

Arthur C. Brooks succeeded him as president at the start of the Late-2000s recession.

The Great Recession stemmed from the collapse of the United States real estate market in relation to the financial crisis of 2007–2008 and the subprime mortgage crisis, though policies of other nations contributed as well.

During the Great Recession, 8.5 million jobs were lost from the peak employment in early 2008 of approximately 138 million to the trough in February 2010 of 129 million, roughly 6% of the workforce.

Despite the fact that quarterly data are being used as recession definition criteria by all G20 members, representing 85% of the world GDP, the International Monetary Fund (IMF) has decided—in the absence of a complete data set—not to declare/measure global recessions according to quarterly GDP data. The Great Recession was a period of general economic decline (recession) observed in world markets during the late 2000s and early 2010s.

The most recent recession to affect the United Kingdom was the late-2000s recession.

Household deleveraging by paying off debts or defaulting on them has begun in some countries.

This is mainly because the continuing rising of government debt, due to the Great Recession, has been offsetting the deleveraging in the private sectors in many countries.

During 2008, three of the largest U.S. investment banks either went bankrupt (Lehman Brothers) or were sold at fire sale prices to other banks (Bear Stearns and Merrill Lynch).

The Bear Stearns Companies, Inc. was a New York-based global investment bank, securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession, and was subsequently sold to JPMorgan Chase.

While Alan Greenspan's role as Chairman of the Federal Reserve has been widely discussed, the main point of controversy remains the lowering of the Federal funds rate to 1% for more than a year, which, according to Austrian theorists, injected huge amounts of "easy" credit-based money into the financial system and created an unsustainable economic boom), there is also the argument that Greenspan's actions in the years 2002–2004 were actually motivated by the need to take the U.S. economy out of the early 2000s recession caused by the bursting of the dot-com bubble—although by doing so he did not help avert the crisis, but only postpone it.

Between December 2008 and December 2015 the target rate remained at 0.00–0.25%, the lowest rate in the Federal Reserve's history, as a reaction to the Financial crisis of 2007–2008 and its aftermath.

The recession renewed interest in Keynesian economic ideas on how to combat recessionary conditions.

Although many economists, such as George Akerlof, Paul Krugman, Robert Shiller, and Joseph Stiglitz, supported Keynesian stimulus, others did not believe higher government spending would help the United States economy recover from the Great Recession.

The Great Recession resulted in a scarcity of valuable assets in the market economy and the collapse of the financial sector (banks) in the world economy; some banks were bailed out by the U.S. federal government.

By 2007, real estate bubbles were still under way in many parts of the world, especially in the United States, France, United Kingdom, Spain, The Netherlands, Australia, United Arab Emirates, New Zealand, Ireland, Poland, South Africa, Greece, Bulgaria, Croatia, Norway, Singapore, South Korea, Sweden, Finland, Argentina, Baltic states, India, Romania, Ukraine, and China.

More recently, Greece has suffered greatly from the late-2000s recession and has been central to the related European sovereign debt crisis.

A 2009 paper identifies twelve economists and commentators who, between 2000 and 2006, predicted a recession based on the collapse of the then-booming housing market in the United States: Dean Baker, Wynne Godley, Fred Harrison, Michael Hudson, Eric Janszen, Med Jones Steve Keen, Jakob Brøchner Madsen, Jens Kjaer Sørensen, Kurt Richebächer, Nouriel Roubini, Peter Schiff, and Robert Shiller.,

When the crisis erupted in 2008, the Financial Times named him one of eight economists who foresaw the crisis.

On the political front, widespread anger at banking bailouts and stimulus measures (begun by President George W. Bush and continued or expanded by President Obama) with few consequences for banking leadership, were a factor in driving the country politically rightward starting in 2010.

Developed in response to the Great Recession, the ARRA's primary objective was to save existing jobs and create new ones as soon as possible.

According to the nonprofit National Bureau of Economic Research (the official arbiter of U.S. recessions), the recession in the U.S. began in December 2007 and ended in June 2009, thus extending over 19 months.

In September 2010, after a conference call with its Business Cycle Dating Committee, the NBER declared that the Great Recession in the United States had officially ended in 2009 and lasted from December 2007 to June 2009.

The distribution of household incomes in the United States has become more unequal during the post-2008 economic recovery.

The United States experienced an economic recovery following the 2008 Great Recession.