2008 Us Economic Recession - 1709 Words

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†¦By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak. As prices declined, borrowers with adjustable-rate mortgages could not refinance to avoid the higher payments associated with rising int erest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1.3 million properties, a 79% increase over 2006. This increased to 2.3 million in 2008, an 81% increase vs. 2007. By August 2008, 9.2% of all U.S. mortgages outstanding were either delinquent or in foreclosure. By September 2009, this had risen to 14.4% Easy credit conditions Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%.[68] This was done to soften the effects of the collapse of the dot-com bubble and the September 2001 terrorist attacks. The Fed then raised the Fed funds rate significantly between July 2004 and July 2006. This contributed to an increase in 1-year and 5-year adjustable-rate mortgage (ARM) rates, making ARM interest rate resets more expensive for homeowners. This may have also contributed to the deflating of the housing bubble, as asset prices generally move inversely to interest rates, and it became riskier to speculate in housing. Weak andShow MoreRelatedThe Recession Since World War II Essay1228 Words   |  5 PagesThe Great Recession period was between the end of 2007 and the middle of 2009, which makes it the lengthiest recession since World War II. The gross domestic product (GDP) fell 4.3% from its peak in the fourth quarter of 2007 to its trough in the second quarter of 2009, the largest decline in the post-war period. The rate for unemployment was 5 % at the end of 2007 and increased to 9.5% in the middle of 2009 and reached 10 % in October 2009. The credit crunch had many effects on the economy. OneRead MoreThe Events Of The Summer Olympics And Michael Phelps Winning 8 Gold Medals1698 Words   |  7 PagesFrom the year 2008 many of us still remember the important events of the Summer Olympics and Michael Phelps winning 8 gold medals and being the first person to ever do this in history. We also remember the election of the 43rd president of the United States Barack Obama who was the first black president to be elected before going on and being elected for a second term. 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It also interested me in finding out what we have done, in the middle of doing, and what we are going to do to get out of the recession. I decided to choose this topic about the US economy and what we were and are doing to get out of the recession because I wanted to learn more about why we went into a recession and how we are now working on how to get out