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In economics, a recession is a business cycle contraction that occurs when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster.
The 2000s United States housing bubble was a real-estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2011. On December 30, 2008, the Case–Shiller home price index reported its largest price drop in its history. The credit crisis resulting from the bursting of the housing bubble is an important cause of the Great Recession in the United States.
The economic policy and legacy of the George W. Bush administration was characterized by significant income tax cuts in 2001 and 2003, the implementation of Medicare Part D in 2003, increased military spending for two wars, a housing bubble that contributed to the subprime mortgage crisis of 2007–2008, and the Great Recession that followed. Economic performance during the period was adversely affected by two recessions, in 2001 and 2007–2009.
The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions of people losing their jobs and many businesses going bankrupt. The U.S. government intervened with a series of measures to stabilize the financial system, including the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act (ARRA).
The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see Financial crisis of 2007–2008.
The Great Recession was a period of marked general decline observed in national economies globally, i.e. a recession, that occurred from late 2007 to 2009. The scale and timing of the recession varied from country to country. At the time, the International Monetary Fund (IMF) concluded that it was the most severe economic and financial meltdown since the Great Depression. One result was a serious disruption of normal international relations.
The 2008–09 Chinese economic stimulus plan is a RMB¥ 4 trillion stimulus package announced by the State Council of the People's Republic of China on 9 November 2008 as an attempt to minimize the impact of the financial crisis of 2007–2008 on the economy of China. Critics of China's stimulus package have blamed it for causing a surge in Chinese debt since 2009, particularly among local governments and state-owned enterprises.
While beginning in the United States, the Great Recession spread to Asia rapidly and has affected much of the region.
North America was one of the focal points of the global, Great Recession. While Canada has managed to return its economy nearly to the levels it enjoyed prior to the recession, the United States and Mexico are still under the influence of the worldwide economic slowdown. The cost of staple items dropped dramatically in the United States as a result of the recession.
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On the evening of January 18, the Danish Parliament agreed to a financial package worth 100 billion Danish kroner. In response, markets panicked yet again. On January 22, the editorial board of The Christian Science Monitor wrote that the four largest U.S. banks "have lost half of their value since January 2."
The subprime mortgage crisis reached a critical stage during the first week of September 2008, characterized by severely contracted liquidity in the global credit markets and insolvency threats to investment banks and other institutions.
The Great Recession in South America, as it mainly consists of commodity exporters, was not directly affected by the financial turmoil, even if the bond markets of Brazil, Argentina, Colombia and Venezuela have been hit.
In the United States, the Great Recession was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output. This slow recovery was due in part to households and financial institutions paying off debts accumulated in the years preceding the crisis along with restrained government spending following initial stimulus efforts. It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis.
Many factors directly and indirectly serve as the causes of the Great Recession that started in 2008 with the US subprime mortgage crisis. The major causes of the initial subprime mortgage crisis and the following recession include lax lending standards contributing to the real-estate bubbles that have since burst; U.S. government housing policies; and limited regulation of non-depository financial institutions. Once the recession began, various responses were attempted with different degrees of success. These included fiscal policies of governments; monetary policies of central banks; measures designed to help indebted consumers refinance their mortgage debt; and inconsistent approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.
This information is related to the effects of the Great Recession that happened worldwide from 2007 to 2012.
The 2007–2008 financial crisis, or Global Financial Crisis (GFC), was a severe worldwide economic crisis that occurred in the early 21st century. It was the most serious financial crisis since the Great Depression (1929). Predatory lending targeting low-income homebuyers, excessive risk-taking by global financial institutions, and the bursting of the United States housing bubble culminated in a "perfect storm".
The COVID-19 recession, also known as the Great Lockdown, was a global economic recession caused by the COVID-19 pandemic. The recession began in most countries in February 2020. After a year of global economic slowdown that saw stagnation of economic growth and consumer activity, the COVID-19 lockdowns and other precautions taken in early 2020 drove the global economy into crisis. Within seven months, every advanced economy had fallen to recession.
References
- ↑ Grynbaum, Michael M.; David Jolly (2008-12-01). "It's Official: Recession Started One Year Ago". The New York Times. Retrieved 2008-12-01.
- ↑ Archived December 17, 2008, at the Wayback Machine
- ↑ Grant, Tavia (2008-12-09). "Canadian job cuts looming". Globe and Mail. Retrieved 2009-01-12.
- ↑ "Bank of Canada lowers overnight rate 2008" (Press release). OTTAWA: Bank of Canada. 2008-12-09. Retrieved 2009-01-12.
- ↑ Continually updated list of banks, individuals, and charities which claim losses due to Madoff at The New York Times Retrieved January 24, 2009 Archived April 3, 2009, at the Wayback Machine
- ↑ Grynbaum, Michael M. (2008-12-01). "Cheer Fades as Stocks Plunge 9%". The New York Times. Retrieved 2008-12-01.
- ↑ "Commercial Properties Seek Federal Bailout". NPR . Archived from the original on 2023-03-08.