Overview
The Great Recession refers to a significant downturn in the global economy that lasted from December 2007 to June 2009. This period was characterized by severe disruptions in financial markets, a collapse in real estate values, industry slumps, and high unemployment. It is distinctly remembered for the subprime mortgage crisis and the bursting of the housing bubble, which were prominent factors leading to the widespread economic meltdown.
Examples
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Unemployment Rates: During the Great Recession, unemployment rates in the United States surpassed 9% for an extended period, peaking at around 10% in 2009.
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Stock Market Crash: Global stock markets suffered significant losses. The Dow Jones Industrial Average plummeted from about 13,000 points in mid-2008 to around 6,500 points by March 2009.
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Foreclosure Crisis: Millions of homeowners faced foreclosure as property values dropped and unemployment soared, making it difficult for many to keep up with mortgage payments.
Frequently Asked Questions
What caused the Great Recession?
The Great Recession was primarily triggered by the collapse of the housing bubble and the financial crisis that ensued. Excessive risk-taking by banks, particularly in the subprime mortgage market, led to widespread defaults and financial instability.
How long did the Great Recession last?
The Great Recession lasted for 19 months, from December 2007 to June 2009. However, the economic impact was felt for several years beyond this period.
What were the global implications of the Great Recession?
The Great Recession affected nearly every country worldwide, leading to severe economic slowdowns, job losses, and a general decline in living standards. Countries with strong ties to the U.S. economy were particularly hard hit.
How did governments respond to the Great Recession?
Governments and central banks implemented various measures, including stimulus packages, bailouts for financial institutions, and monetary policies like lowering interest rates to combat the recession and stabilize the economy.
Related Terms
Subprime Mortgage Crisis
A situation where lenders issued mortgages to borrowers with low credit scores, leading to a high rate of defaults and contributing to the financial crisis.
Housing Bubble
An economic bubble in the real estate market characterized by rapidly increasing property prices, which eventually burst, leading to a steep decline in property values.
Financial Crisis
A condition in which financial institutions or assets suddenly lose a large part of their value, often resulting in panic and a flight to safety.
Unemployment Rate
The percentage of the labor force that is jobless and actively looking for employment.
Online Resources
- Federal Reserve Historical Overview
- National Bureau of Economic Research
- U.S. Bureau of Labor Statistics
- IMF Great Recession Analysis
References
- National Bureau of Economic Research. “The Great Recession.”
- Federal Reserve. “Chronology of the Financial Crisis.”
- Bureau of Labor Statistics. “Unemployment Data During the Great Recession.”
Suggested Books for Further Studies
- “The Big Short” by Michael Lewis
- “Too Big to Fail” by Andrew Ross Sorkin
- “After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead” by Alan S. Blinder
- “End This Depression Now!” by Paul Krugman
