the great recession of 2008 2009: causes


  • Overview

    The Great Recession that began in 2008 led to some of the highest recorded rates of unemployment and home foreclosures in the U.S. since the Great Depression. Catalyzed by the crisis in subprime mortgage-backed securities, the crisis spread to mutual funds, pensions, and the corporations that owned these securities, with widespread national and glo...

  • What Caused The Banking Crisis?

    Fligstein and Adam Goldstein (Assistant Professor at Princeton University)1examine the history of bank action leading up to the market collapse, paying particular attention to why banks created and purchased risky mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) in the first place, and why they ignored early warnings of ...

  • What Caused Predatory Lending and Securities Fraud?

    In a 2015 working paper, Fligstein and co-author Alexander Roehrkasse (doctoral candidate at UC Berkeley)3 examine the causes of fraud in the mortgage securitization industry during the financial crisis. Fraudulent activity leading up to the market crash was widespread: mortgage originators commonly deceived borrowers about loan terms and eligibili...

  • Why Didn’T The Federal Reserve Anticipate The Oncoming Crisis?

    In a 2014 IRLE working paper by Fligstein with Jonah Stuart Brundage and Michael Schultz (both doctoral candidates at UC Berkeley),5the authors analyze 72 meeting transcripts from the Federal Reserve’s decision-making body, the Federal Open Market Committee (FOMC), from 2000 until the 2008 market crash. FOMC members set monetary policy and have par...

Did gas prices cause the Great Recession?

As the price of gas went up, families stopped buying homes 30 minutes from the city. For folks shacking up in the exurbs, higher gas bills ate into mortgage money. For companies, higher energy bills shocked productivity. Classic oil-shock + housing development arrested + financial crisis = Great Recession.

When was the last recession in USA?

There have been 12 recessions since World War II that lasted 10.3 months on average. But there's a wide range. The most recent recession was the shortest ever– lasting just two months, from February to April 2020. The prior recession, also referred to as the Great Recession, lasted 18 months.

What was the impact of the Great Recession?

The Great Recession led to significant and persistent drops in both wages and employment. Median real household cash income fell from $57,357 in 2007 to $52,690 in 2011. 1 15.6 million people were unemployed at the peak of the recession. Poverty increased from 12.5% in 2007 to 15.1% in 2010. How did this affect people already in poverty?

How was the Great Recession impacted American workers?

While the recession officially ended in 2009, the impact of the reduced economic activity, job loss, falling wages, foreclosure and diminished wealth had lasting effects for many American workers and their families.

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