Essay on 2008 Us Economic Recession

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INTRODUCTIONS

The Global Financial Crisis of 2008 is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of small and big banks by national governments, and downturns in stock markets around the world. In United States, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer confidence, declines in consumer wealth estimated in trillions of US dollars, and a downturn in economic activity leading to the 2008–2012 global recession and contributing to the European …show more content…
Increased debt burden or over-leveraging

U.S. households and financial institutions became increasingly indebted or overleveraged during the years preceding the crisis. This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn. USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990.

From 2004 to 2007, the top five U.S. investment banks each significantly increased their financial leverage (see diagram), which increased their vulnerability to a financial shock.

Commodities boom

Rapid increases in a number of commodity prices followed the collapse in the housing bubble. The price of oil nearly tripled from $50 to $147 from early 2007 to 2008, before plunging as the financial crisis began to take hold in late 2008. An increase in oil prices tends to divert a larger share of consumer spending into gasoline, which creates downward pressure on economic growth in oil importing countries, as wealth flows to oil-producing states.

Copper prices increased at the same time as the oil prices. Copper traded at about

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Essay O 1173268

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The Great Recession officially lasted from December 2007 to June 2009. It began with a crash of the 8 trillion dollar housing bubble. The main factor that made the recession as worse as it became was the diminishing of consumer spending. As consumer spending decreased, so did business investment, which led to countless Americans becoming jobless. In 2008 and 2009, 8.4 million jobs were removed for the United States Labor market, equivalent to 6.1% of total payroll employment. This employment contraction…

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