Changes

The '''Recession of 2008''' (also called the '''Recession of the late 2000's''' or the '''Great Recession''') was a major worldwide economic downturn that began in 2008 and continued into 2010 and beyond. It was caused by the [[Financial Crisis of 2008]]; it was by far the worst recession since the Great Depression of the 1930s. The worldwide recession hit bottom in December 2009; however after five years there were few signs that the American economy started moving upward again. Five million of the 8 million jobs lost<ref>The effectiveness of [[American Recovery and Reinvestment Act of 2009|Stimulus]]: [http://research.stlouisfed.org/fred2/graph/fredgraph.png?graph_id=112811 Job growth under President Obama's first term;] Source: United States Department of Labor.</ref> did not return - despite an increase in population of 10 million over the same span of time covering President [[Barack Obama]]'s first term.<ref>[https://research.stlouisfed.org/fred2/graph/fredgraph.png?graph_id=112809 U.S. Population growth during Obama's first four years in office.] Source: U.S. Census Bureau.</ref>   

The '''Recession of 2008''' (also called the '''Recession of the late 2000s''' or the '''Great Recession''') was a major worldwide economic downturn that began in 2008 and continued into 2010 and beyond. It was caused by the [[Financial Crisis of 2008]]; it was by far the worst recession since the Great Depression of the 1930s. The worldwide recession hit bottom in December 2009; however after five years there were few signs that the American economy started moving upward again. Five million of the 8 million jobs lost<ref>The effectiveness of [[American Recovery and Reinvestment Act of 2009|Stimulus]]: [http://research.stlouisfed.org/fred2/graph/fredgraph.png?graph_id=112811 Job growth under President Obama's first term;] Source: United States Department of Labor.</ref> did not return - despite an increase in population of 10 million over the same span of time covering President [[Barack Obama]]'s first term.<ref>[https://research.stlouisfed.org/fred2/graph/fredgraph.png?graph_id=112809 U.S. Population growth during Obama's first four years in office.] Source: U.S. Census Bureau.</ref>   

[[Greece]], [[Portugal]] and [[Ireland]] remain in serious trouble, while [[China]] and [[Brazil]] rebounded and are growing rapidly. Concerning the United States economy, some proponents of [[free market]] [[capitalism]] declare that  [[Federal Reserve]] Chairman [[Ben Bernanke]] and the United States Congress should not have [[bailout|bailed out]] failing firms and instead should have allowed free market capitalism to recover as it did in the depression of 1920, which recovered without government intervention (free market capitalists assert that government intervention can drag out recessions and depressions).<ref>http://www.youtube.com/watch?v=zzTXaAXusiI</ref><ref>http://www.youtube.com/watch?v=czcUmnsprQI</ref> A 2005 study found that government corporate bailouts are often done for mere political considerations and the economic resources allocated exhibit significantly worse economic performance than resources allocated using purely business considerations.<ref>http://papers.ssrn.com/sol3/papers.cfm?abstract_id=676905</ref>

[[Greece]], [[Portugal]] and [[Ireland]] remain in serious trouble, while [[China]] and [[Brazil]] rebounded and are growing rapidly. Concerning the United States economy, some proponents of [[free market]] [[capitalism]] declare that  [[Federal Reserve]] Chairman [[Ben Bernanke]] and the United States Congress should not have [[bailout|bailed out]] failing firms and instead should have allowed free market capitalism to recover as it did in the depression of 1920, which recovered without government intervention (free market capitalists assert that government intervention can drag out recessions and depressions).<ref>http://www.youtube.com/watch?v=zzTXaAXusiI</ref><ref>http://www.youtube.com/watch?v=czcUmnsprQI</ref> A 2005 study found that government corporate bailouts are often done for mere political considerations and the economic resources allocated exhibit significantly worse economic performance than resources allocated using purely business considerations.<ref>http://papers.ssrn.com/sol3/papers.cfm?abstract_id=676905</ref>

[[Leftist]]s have incorrectly attributed the cause of the recession to Bush Administration policies, calling it the "Bush Recession." However, many people recognize the loosening of credit guidelines in the Clinton era and government guarantees for [[subprime lending]] encouraged banks to make foolish loans which they considered had minimal risk to themselves. This, together with the threat of [[civil rights]] lawsuits under the [[Community Reinvestment Act]] were the mortgage lenders primary motivations.

[[Leftist]]s have incorrectly attributed the cause of the recession to Bush Administration policies, calling it the "Bush Recession." However, many people recognize the loosening of credit guidelines in the Clinton era and government guarantees for [[subprime lending]] encouraged banks to make foolish loans which they considered had minimal risk to themselves. This, together with the threat of [[civil rights]] lawsuits under the [[Community Reinvestment Act]] were the mortgage lenders primary motivations.

In the U.S. GDP fell in the fourth quarter of 2008 (October–November-December), by 6.2% annual rate, with declines heaviest in business investment, exports, finance, autos, housing, construction, and retail sales.<ref>Three of the four engines of economic growth -- consumer spending, business investment and exports -- declined sharply. Consumer spending fell at an annualized rate of 4.3%; business investment in equipment and software sank at an astonishing annual rate  of 29%; exports of goods and services plunged 24%. ''Washington Post'' Feb. 28, 2009</ref> The steep decline continued; GDP in the first quarter of 2009 (January–February-March) fell at the annualized rate of 6.1%, much worse than expected.  American business slashed capital investment at an annual rate of -38%. Investment in software and computer equipment declined by an annualized 33.8%, and investment in new buildings was down 44.2%.  By Spring 2009, financial markets that spiralled out of control in late 2008 stabilized, and declines in retail sales and orders by manufacturers no longer posted record declines.<ref>An "annualized rate" is four times the actual quarterly rate. Jack Healy, "U.S. Economy in 2nd Straight Quarter of Steep Decline," [http://www.nytimes.com/2009/04/30/business/economy/30econ.html?_r=1&hp ''New York Times'' April 29, 2009]</ref>

In the U.S. GDP fell in the fourth quarter of 2008 (October–November–December), by 6.2% annual rate, with declines heaviest in business investment, exports, finance, autos, housing, construction, and retail sales.<ref>Three of the four engines of economic growth -- consumer spending, business investment and exports -- declined sharply. Consumer spending fell at an annualized rate of 4.3%; business investment in equipment and software sank at an astonishing annual rate  of 29%; exports of goods and services plunged 24%. ''Washington Post'' Feb. 28, 2009</ref> The steep decline continued; GDP in the first quarter of 2009 (January–February–March) fell at the annualized rate of 6.1%, much worse than expected.  American business slashed capital investment at an annual rate of -38%. Investment in software and computer equipment declined by an annualized 33.8%, and investment in new buildings was down 44.2%.  By Spring 2009, financial markets that spiralled out of control in late 2008 stabilized, and declines in retail sales and orders by manufacturers no longer posted record declines.<ref>An "annualized rate" is four times the actual quarterly rate. Jack Healy, "U.S. Economy in 2nd Straight Quarter of Steep Decline," [http://www.nytimes.com/2009/04/30/business/economy/30econ.html?_r=1&hp ''New York Times'' April 29, 2009]</ref>

The stock market fell by 50% in 2008, wiping out trillions of dollars in assets. More trillions were lost as housing prices fell by 20%. Adding together the declines in housing and the stock market, the net worth of American households declined from $63.7 trillion in January 2008 to $51.5 trillion in January 2009, a decline of $11.2 trillion or 18%. That is, Americans owned $11 trillion less wealth, and adjusted by buying less and investing less. Meanwhile mortgages and credit-card debt together reached $13 trillion, or 123% of after-tax income, a huge jump since 1995, when it was 83% of income.<ref>see [http://online.wsj.com/article/SB123687371369308675.html?mod=djemalertNEWS  S. Mitra Kalita, "Americans See 18% of Wealth Vanish,"  ''Wall Street Journal'' Mar. 13, 2009]</ref>  

The stock market fell by 50% in 2008, wiping out trillions of dollars in assets. More trillions were lost as housing prices fell by 20%. Adding together the declines in housing and the stock market, the net worth of American households declined from $63.7 trillion in January 2008 to $51.5 trillion in January 2009, a decline of $11.2 trillion or 18%. That is, Americans owned $11 trillion less wealth, and adjusted by buying less and investing less. Meanwhile, mortgages and credit-card debt together reached $13 trillion, or 123% of after-tax income, a huge jump since 1995, when it was 83% of income.<ref>see [http://online.wsj.com/article/SB123687371369308675.html?mod=djemalertNEWS  S. Mitra Kalita, "Americans See 18% of Wealth Vanish,"  ''Wall Street Journal'' Mar. 13, 2009]</ref>  

Bankruptcies among small businesses soared from 206 a day in Dec. 2007 to 357 a day in March 2009.  In April, 2009, came the largest real estate bankruptcy in history, as General Growth, which owned and managed more than 200 malls, proved unable to handle its crushing $27 billion debt load. The debt was created by heavy borrowing in optimistic days to build new malls.  

Bankruptcies among small businesses soared from 206 a day in Dec. 2007 to 357 a day in March 2009.  In April, 2009, came the largest real estate bankruptcy in history, as General Growth, which owned and managed more than 200 malls, proved unable to handle its crushing $27 billion debt load. The debt was created by heavy borrowing in optimistic days to build new malls.  

Wealth levels plunged worldwide. Stock markets in other major countries fell even faster than in the United States.  Most companies worldwide reported reduced sales and sharply reduced profits, as banks refused to lend and consumers refused to spend, fearing the worst.   

Wealth levels plunged worldwide. Stock markets in other major countries fell even faster than in the United States.  Most companies worldwide reported reduced sales and sharply reduced profits, as banks refused to lend and consumers refused to spend, fearing the worst.   

A series of emergency measures enacted by the Federal Reserve (on its own authority) and Congress after heavy prodding by presidents Bush and Obama resulted in trillions of dollars in loans, banking bailouts and guarantees, a half-trillion [[Direct spending|new stimulus spending]]<ref>These supposed "temporary", "emergency" spending measures by 2013 became permanent features of the federal budget, as the $1 trillion deficit to cover its continuing costs and an accumulating [[national debt]]. [http://online.wsj.com/article/SB10001424052748704820904575055413176800990.html The Eternal Stimulus,] ''Wall Street Journal'', February 11, 2010.</ref><ref>[http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CFAQFjAC&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304840904577422452374106994.html&ei=FhpNUYiGOeioigKEyIDoCQ&usg=AFQjCNEzdyI4QJ3sxiXA8-9ufhj1ekr2Aw&sig2=x_mb1GLPfNq-cRX4mvqN7A&bvm=bv.44158598,d.cGE Obama's Permanent Emergency:'Temporary' spending becomes permanent,] ''Wall Street Journal'', May 23, 2012.</ref> and a third of a trillion in tax cuts, but by mid-March 2009 the outlook remained bleak as the economy continued downward.  Therefore the Federal Reserve announced yet another trillion dollar plan on March 18, this one to buy $300 billion in Treasury bonds, and $750 billion in mortgage-backed securities. The idea was to keep mortgage rates low in the hope people will start buying houses again, but the problem was that the prices were falling, so that if a person bought a $500,000 house in 2009 it would be worth $400,000 a year later, despite the Fed's intervention.

A series of emergency measures enacted by the Federal Reserve (on its own authority) and Congress after heavy prodding by presidents Bush and Obama resulted in trillions of dollars in loans, banking bailouts and guarantees, a half-trillion [[Direct spending|new stimulus spending]]<ref>These supposed "temporary", "emergency" spending measures by 2013 became permanent features of the federal budget, as the $1 trillion deficit to cover its continuing costs and an accumulating [[national debt]]. [http://online.wsj.com/article/SB10001424052748704820904575055413176800990.html The Eternal Stimulus,] ''Wall Street Journal'', February 11, 2010.</ref><ref>[http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CFAQFjAC&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304840904577422452374106994.html&ei=FhpNUYiGOeioigKEyIDoCQ&usg=AFQjCNEzdyI4QJ3sxiXA8-9ufhj1ekr2Aw&sig2=x_mb1GLPfNq-cRX4mvqN7A&bvm=bv.44158598,d.cGE Obama's Permanent Emergency:'Temporary' spending becomes permanent,] ''Wall Street Journal'', May 23, 2012.</ref> and a third of a trillion in tax cuts, but by mid-March 2009 the outlook remained bleak as the economy continued downward.  Therefore, the Federal Reserve announced yet another trillion dollar plan on March 18, this one to buy $300 billion in Treasury bonds, and $750 billion in mortgage-backed securities. The idea was to keep mortgage rates low in the hope people will start buying houses again, but the problem was that the prices were falling, so that if a person bought a $500,000 house in 2009 it would be worth $400,000 a year later, despite the Fed's intervention.

In the first quarter of 2009 (January 1 to March 30), GDP fell sharply in major countries compared to the fourth quarter of 2008.  In the US GDP was down 6.3%.

In the first quarter of 2009 (January 1 to March 30), GDP fell sharply in major countries compared to the fourth quarter of 2008.  In the US GDP was down 6.3%.

see [[Housing]]

see [[Housing]]

The construction of new housing and commercial buildings has fallen off; many commercial buildings and shopping centers have high vacancy rates and may be hard pressed to pay their debts. Housing prices continue low—falling from an average of $255,000 to $180,000, as millions of empty houses are a drag on the market.  Indeed much of the housing activity in 2009 involved sales of foreclosed properties at distress prices.

The construction of new housing and commercial buildings has fallen off; many commercial buildings and shopping centers have high vacancy rates and may be hard pressed to pay their debts. Housing prices continue low—falling from an average of $255,000 to $180,000, as millions of empty houses are a drag on the market.  Indeed, much of the housing activity in 2009 involved sales of foreclosed properties at distress prices.

[[Image:U-2009-2.jpg|thumb|275px|right]]

[[Image:U-2009-2.jpg|thumb|275px|right]]

===Auto sector===

===Auto sector===

[[Image:U-states-08.jpg|thumb|380px]]

[[Image:U-states-08.jpg|thumb|380px]]

===Unemployment===

===Unemployment===

After the full implementation of the George W. Bush tax cuts, [[unemployment]] reached a low of 4.1% by October, 2006. After the [[Fannie Mae]] crash, the U.S. unemployment rate began trending upward, reaching 9.4% in May 2009. Analysts from the National Bureau of Economic research say that the current nation-wide recession began in December 2007. Unemployment reached 6.5% by election day 2008, and in some parts of the country already reached 10% and higher.

After the full implementation of the George W. Bush tax cuts, [[unemployment]] reached a low of 4.1% by October, 2006. After the [[Fannie Mae]] crash, the U.S. unemployment rate began trending upward, reaching 9.4% in May 2009. Analysts from the National Bureau of Economic research say that the current nationwide recession began in December 2007. Unemployment reached 6.5% by election day 2008, and in some parts of the country already reached 10% and higher.

==Worldwide crisis==

==Worldwide crisis==