Great Recession Research Paper

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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 was by far the most dramatic of any recession since the Great Depression.
In December of 2007, the recession officially began. At that point in time, unemployment stood at 5 percent. On December 12th, the Federal Reserve created a Term Auction …show more content…
On January 30th, the Federal Reserve reduced short-term interest rates, for the fifth time in a month, to 3 percent (the rate was 5.25 percent in September of 2007). On February 13th, President George W. Bush signed the Economic Stimulus Package of 2008 in an effort to encourage consumer spending; it gave individuals a tax rebate and encouraged business investment. However, on March 16th, the first brokerage firm, Bear Stearns, collapses; it was bought out by JPMorgan Chase. In response to economic downfall, the Federal Reserve dropped short-term interest rates to two percent on April 30th. As mortgage giants Fannie Mae and Freddie Mac began to diminish, the federal government overtook them on September 7th. On September 15th, Lehman Brothers filed for the largest bankruptcy in United States history; this was one of the biggest events of the recession. The Federal Reserve Bank bailed out the insurance giant AIG on September 16th. President Bush decided that more action needed to be taken in order to aid the failing institutions. So, on October 3rd, he signed the emergency bailout package TARP (Troubled Asset Relief Program) into law; it entailed $700 billion. Bush used $350 billion of TARP, but only to safeguard the banks; it did nothing to protect homeowners. Unfortunately, between October 6th-10th, Dow suffered its worst weekly loss in history, falling 18 percent. As a result, on October 28th the US Treasury gave out …show more content…
On January 16th, the government disclosed a massive aid package for Bank of America, inclusive of “$20 billion in bailout money and $100 billion in guarantees” (2). President Obama signed the Economic Stimulus Act (otherwise known as The American Recovery and Reinvestment Act (ARRA) or the Obama Stimulus Package), a 787 billion dollar stimulus package that consisted of tax cuts and money allotted to schools, health care, green energy, and infrastructure. It sturdily created jobs in education and infrastructure and returned money into the pockets of American families and small businesses Also, it facilitated the economy back to positive GDP growth by the third quarter of 2009. On February 25th, “stress tests” were announced to be conducted by the Federal Reserve along with other agencies to determine if certain banks needed more aid. On March 9th, Dow hit its lowest point of the recession; it had dropped a total of 54 percent since its high in October 9th, 2007. General Motors filed for bankruptcy on June 1st and announced that it will close 14 US factories, leaving thousands jobless. The National Bureau of Economic Research officially dated the end of the recession as June 2009, after 18 months; it was the largest downturn in postwar
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