Great recession in the United States - wikipedia Great recession in the United States Great Recession Africa Americas South America United States Asia Europe Oceania Subprime mortgage crisis Major dimensions Subprime crisis impact timeline 2000s energy crisis United States housing bubble United States housing market correction Financial crisis of 2007 -- 08 Great Recession of 2008 -- 09 Automotive industry crisis of 2008 -- 10 Financial Crisis Inquiry Commission Dodd -- Frank Wall Street Reform and Consumer Protection Act Causes Causes of the United States housing bubble Credit rating agencies and the subprime crisis Government policies and the subprime mortgage crisis Causes of the Great Recession Summit meetings 34th G8 summit ( July 2008 ) G - 20 Washington summit ( November 2008 ) APEC Peru ( November 2008 ) China -- Japan -- South Korea trilateral summit ( December 2008 ) G - 20 London Summit ( April 2009 ) Legislation and spending 2008 European Union stimulus plan 2008 -- 09 Keynesian resurgence American Recovery and Reinvestment Act of 2009 Banking ( Special Provisions ) Act 2008 Chinese economic stimulus program Economic Stimulus Act of 2008 Emergency Economic Stabilization Act of 2008 Federal Reserve responses to the subprime crisis Government intervention during the subprime mortgage crisis Green New Deal Housing and Economic Recovery Act of 2008 National fiscal policy response to the Great Recession Regulatory responses to the subprime crisis Subprime mortgage crisis solutions debate Term Asset - Backed Securities Loan Facility Troubled Asset Relief Program ( TARP ) Company bailouts American International Group Chrysler Citigroup Fannie Mae Freddie Mac General Motors Royal Bank of Scotland Group UBS List of banks acquired or bankrupted during the Great Recession Following the bursting of the housing bubble in mid-2007, and the housing market correction and subprime mortgage crisis the following year, the United States entered a severe recession. The National Bureau of Economic Research ( NBER ) dates the beginning of the recession as December 2007. According to the Department of Labor, roughly 8.7 million jobs were shed from February 2008 to February 2010, and GDP contracted by 5.1 %, making the Great Recession the worst since the Great Depression. Unemployment rose from 4.7 % in November 2007 to peak at 10 % in October 2009. The bottom, or trough, was reached in the second quarter of 2009 ( marking the technical end of the recession, defined as at least two consecutive quarters of declining GDP ). The NBER, dating by month, points to June 2009 as the final month of the recession. The recovery after the 2009 trough was weak and both GDP and job growth erratic and uneven. A solid, strong pace of job growth was not seen until 2011. By August 2015, the unemployment rate was 5.1 %, below the historical average of 5.6 % but still barely above the 5 % when the recession started in December 2007, with roughly 12,639,000 jobs added since the Great Recession 's payroll trough in February 2010. American household net worth fell from a pre-recession peak of $68 trillion in Q3 2007 to $55 trillion by Q1 2009, while real median household income fell from $56,436 in 2007 to $51,758 by 2012. The poverty rate increased from 2006 to 2010, reaching a peak of 15 %, and held there through 2012 before dropping to 14.5 % in 2013. Contents 1 Background 2 Early suggestions 3 Causes 4 Government policies 5 Role of Alan Greenspan 6 Role of business leaders 7 Formation of bubble 7.1 Recession declared by economists 7.2 Rise in unemployment 7.3 Liquidity crisis 7.4 Bailout of U.S. financial system 8 United States policy responses 9 Recovery 10 See also 11 References Background After the Great Depression of the 1930s, the American economy experienced robust growth, with periodic lesser recessions, for the rest of the 20th century. The federal government enforced the Securities Exchange Act ( 1934 ) and The Chandler Act ( 1938 ), which tightly regulated the financial markets. The Securities Exchange Act of 1934 regulated the trading of the secondary securities market and The Chandler Act regulated the transactions in the banking sector. There were a few investment banks, small by current standards, that expanded during the late 1970s, such as JP Morgan. The Reagan Administration in the early 1980s began a thirty - year period of financial deregulation. The financial sector sharply expanded, in part because investment banks were going public, bringing them vast sums of stockholder capital. From 1978 to 2008, the average salary for workers outside of investment banking in the U.S. increased from $40 k to $50 k -- a 25 percent salary increase - while the average salary in investment banking increased from $40 k to $100 k -- a 150 percent salary increase. Deregulation also precipitated financial fraud - often tied to real estate investments - sometimes on a grand scale, such as the savings and loan crisis. By the end of the 1980s, many workers in the financial sector were being jailed for fraud, but many Americans were losing their life savings. Large investment banks began merging and developing Financial conglomerates ; this led to the formation of the giant investment banks like Goldman Sachs. Early suggestions Number of U.S. household properties subject to foreclosure actions by quarter In the early months of 2008, many observers believed that a U.S. recession had begun. The collapse of Bear Stearns and the resulting financial market turbulence signaled that the crisis would not be mild and brief. Alan Greenspan, ex-Chairman of the Federal Reserve, stated in March 2008 that the 2008 financial crisis in the United States `` is likely to be judged in retrospect as the most wrenching since the end of World War II ''. A chief economist at Standard & Poor 's said in March 2008 he had projected a worst - case - scenario in which the country would endure a double - dip recession, in which the economy would briefly recover in the summer 2008, before plunging again. Under this scenario, the economy 's total output, as measured by the gross domestic product ( GDP ), would drop by 2.2 percentage points, making it among the worst recessions in the post World War II period. The former head of the National Bureau of Economic Research said in March 2008 that he believed the country was then in a recession, and it could be a severe one. A number of private economists generally predicted a mild recession ending in the summer of 2008 when the economic stimulus checks going to 130 million households started being spent. A chief economist at Moody 's predicted in March 2008 that policymakers would act in a concerted and aggressive way to stabilize the financial markets, and that the economy would suffer, but not enter a prolonged and severe recession. It takes many months before the National Bureau of Economic Research, the unofficial arbiter of when recessions begin and end, would make its own ruling. According to numbers published by the Bureau of Economic Analysis in May 2008, the GDP growth of the previous two quarters was positive. As one common definition of a recession is negative economic growth for at least two consecutive fiscal quarters, some analysts suggested this indicates that the U.S. economy was not in a recession at the time. However, this estimate has been disputed by analysts who argue that if inflation is taken into account, the GDP growth was negative for those two quarters, making it a technical recession. In a May 9, 2008 report, the chief North American economist for investment bank Merrill Lynch wrote that despite the GDP growth reported for the first quarter of 2008, `` it is still reasonable to believe that the recession started some time between September and January '', on the grounds that the National Bureau of Economic Research 's four recession indicators all peaked during that period. New York 's budget director concluded the state of New York was officially in a recession by the summer of 2008. Governor David Paterson called an emergency economic session of the state legislature for August 19 to push a budget cut of $600 million on top of a hiring freeze and a 7 percent reduction in spending at state agencies that had already been implemented by the Governor. An August 1 report, issued by economists with Wachovia Bank, said Florida was officially in a recession. White House budget director Jim Nussle maintained at that time that the U.S. had avoided a recession, following revised GDP numbers from the Commerce Department showing a 0.2 percent contraction in the fourth quarter of 2007 down from a 0.6 percent increase, and a downward revision to 0.9 percent from 1 percent in the first quarter of 2008. The GDP for the second quarter was placed at a 1.9 percent expansion, below an expected 2 percent. On the other hand, Martin Feldstein, who headed the National Bureau of Economic Research and served on the group 's recession - dating panel, said he believed the U.S. was in a very long recession and that there was nothing the Federal Reserve could do to change it. In a CNBC interview at the end of July 2008, Alan Greenspan said he believed the U.S. was not yet in a recession, but that it could enter one due to a global economic slowdown. A study released by Moody 's found two - thirds of the 381 largest metropolitan areas in the United States were in a recession. The study also said 28 states were in recession, with 16 at risk. The findings were based on unemployment figures and industrial production data. In March 2008, financier Warren Buffett stated in a CNBC interview that by a `` common sense definition '', the U.S. economy was already in a recession. Buffett has also stated that the definition of recession is flawed and that it should be three consecutive quarters of GDP growth that is less than population growth. However, the U.S. only experienced two consecutive quarters of GDP growth less than population growth. Causes Main article : Subprime mortgage crisis Federal Reserve Chair Ben Bernanke testified in September 2010 regarding the causes of the crisis. He wrote that there were shocks or triggers ( i.e., particular events that touched off the crisis ) and vulnerabilities ( i.e., structural weaknesses in the financial system, regulation and supervision ) that amplified the shocks. Examples of triggers included : losses on subprime mortgage securities that began in 2007 and a run on the shadow banking system that began in mid-2007, which adversely affected the functioning of money markets. Examples of vulnerabilities in the private sector included : financial institution dependence on unstable sources of short - term funding such as repurchase agreements or Repos ; deficiencies in corporate risk management ; excessive use of leverage ( borrowing to invest ) ; and inappropriate usage of derivatives as a tool for taking excessive risks. Examples of vulnerabilities in the public sector included : statutory gaps and conflicts between regulators ; ineffective use of regulatory authority ; and ineffective crisis management capabilities. Bernanke also discussed `` Too big to fail '' institutions, monetary policy, and trade deficits. The U.S. Financial Crisis Inquiry Commission reported its findings in January 2011. It concluded that `` the crisis was avoidable and was caused by : Widespread failures in financial regulation, including the Federal Reserve 's failure to stem the tide of toxic mortgages ; Dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk ; An explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis ; Key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw ; and systemic breaches in accountability and ethics at all levels. '' Among the important catalysts of the subprime crisis were the influx of money from the private sector, the banks entering into the mortgage bond market, government policies aimed at expanding homeownership, speculation by many home buyers, and the predatory lending practices of the mortgage lenders, specifically the adjustable - rate mortgage, 2 -- 28 loan, that mortgage lenders sold directly or indirectly via mortgage brokers. On Wall Street and in the financial industry, moral hazard lay at the core of many of the causes. Government policies A federal inquiry found that some federal government policies ( or lack of them ) were responsible to a large extent for the recession in the United States and the resultant vast unemployment. Factors include : `` Members of the Right tried to blame the seeming market failures on government ; in their mind the government effort to push people with low incomes into home ownership was the source of the problem. Widespread as this belief has become in conservative circles, virtually all serious attempts to evaluate the evidence have concluded that there is little merit in this view. '' Joseph Stiglitz The Community Reinvestment Act is not a static piece of legislation. It evolved over the years from a relatively hands - off law focused on process into one that focused on outcomes. Banks responded by increasing the CRA loans they made, a move that entailed relaxing their lending standards. Forty - five percent of subprime loan originations went to lower - income borrowers or borrowers in lower - income neighborhoods in 2005 and 2006, where the foreclosures are almost twice as likely. This was made possible by the constant reforms to the Community Reinvestment Act. However, the Financial Crisis Inquiry Commission reported that `` the CRA was not a significant factor in subprime lending or the crisis. Many subprime lenders were not subject to the CRA. Research indicates only 6 % of high - cost loans -- a proxy for subprime loans -- had any connection to the law. Loans made by CRA - regulated lenders in the neighborhoods in which they were required to lend were half as likely to default as similar loans made in the same neighborhoods by independent mortgage originators not subject to the law. '' Government - sponsored enterprise under the lax rules made to the Community Reinvestment Act, GSEs started to offer too many loans that were never repaid. The repeal of the Glass -- Steagall Act allowed banks to use insured depositories to underwrite private securities loans and sell them on the open market in the form of securities. Better known as mortgage - backed security. Giving Fannie Mae & Freddie Mac GSE status allowed Fannie Mae and Freddie Mac to borrow money in the bond market at lower rates ( yields ) than other financial institutions. With their funding advantage, they purchased and invested in huge numbers of mortgages and mortgage - backed securities, and they did so with lower capital requirements than other regulated financial institutions and banks. Fannie Mae and Freddie Mac began to experience large losses on their retained portfolios, especially on their Alt - A and subprime investments. In 2008, the sheer size of their retained portfolios and mortgage guarantees led the Federal Housing Finance Agency to conclude that they would soon be insolvent. Under, GSE status Fannie Mae and Freddie Mac 's debt and credit guarantees grew so large, that 90 percent of all residential mortgages are financed through Fannie and Freddie or the Federal Housing Administration. By 1966, the United States had suspended its postal savings system which encouraged savings by allowing people to buy certificates of deposit at post offices for as little as a dollar. This started the transformation from a saving to consumption economy. Americans started reducing their savings and increased their debt. This temporarily kept private consumption and thus aggregate demand and employment high, but also contributed to the creation of the credit bubble which eventually burst. Offshoring of American jobs : The U.S. government has from time to time encouraged the outsourcing of American jobs by various subsidies and through loopholes in tax policy which led to wage stagnation and the loss of American jobs. When unemployed Americans did find jobs, many of the jobs were low - wage or entry level jobs. Encouraging mergers : The U.S. government in its deregulatory periods has encouraged large corporate mergers, which often have the effect of reducing tax revenues and often choked market competition. Many such mergers act to cut employment, as well. The U.S. Treasury Department has allowed banks and other financial institutions in many cases to use the 2008 and 2009 bailout money to buy out their competitors. Allowing unemployment to grow to control inflation : U.S. government policy sometimes favors growing unemployment ostensibly in order to achieve long run growth by reducing inflation. According to Merrill Lynch chief economist David Rosenberg, `` The number of people not on temporary layoff surged 220,000 in August and the level continues to reach new highs, now at 8.1 million. This accounts for 53.9 % of the unemployed -- again a record high -- and this is a proxy for permanent job loss, in other words, these jobs are not coming back. Against that backdrop, the number of people who have been looking for a job for at least six months with no success rose a further half - percent in August, to stand at 5 million -- the long - term unemployed now represent a record 33 % of the total pool of joblessness. '' Role of Alan Greenspan Those of us who have looked to the self - interest of lending institutions to protect shareholders ' equity, myself included, are in a state of shocked disbelief. Alan Greenspan Alan Greenspan was the Chairman of the Federal Reserve of the United States from 1987 to 2006. He was appointed by President Ronald Reagan in August 1987 and was reappointed by President Bill Clinton in 1996. He was, perhaps, the person most singly responsible for the housing bubble in the U.S., although he said that `` I really did n't get it until very late in 2005 and 2006. '' Greenspan stated that the housing bubble was `` fundamentally engendered by the decline in real long - term interest rates '', though he also claims that long - term interest rates are beyond the control of central banks because `` the market value of global long - term securities is approaching $100 trillion '' and thus these and other asset markets are large enough that they `` now swamp the resources of central banks ''. Role of Business leaders A 2012 book by Hedrick Smith, Who Stole the American Dream ?, suggests that the Powell Memo was instrumental in setting a new political direction for US business leaders that led to `` America 's contemporary economic malaise ''. Formation of bubble There was a sharp increase in sub-prime loans in 2006. Now the borrowers could borrow even 99 percent of their investments. The investment banks preferred sub-prime loans, as they earned high revenue due to high risk ; poorer ratings yield higher interest rates. This massive credit flow drove demand in the housing sector, helping expand the bubble. Mortgage regulations were relaxed and there were huge profits in the financial sector ; some stock prices tied to real estate and financial firms skyrocketed. The leverage ratio during the bubble also was very high, as banks borrowed heavily to give loans. The leverage ratio is the ratio between the funds borrowed by banks and the banks ' own assets. The ratio was nearly 33 : 1 during late 2006. There were also faulty ratings by the trusted rating agencies. Due to the nature of the CDO and the passing of responsibility and risk up the securitization food chain, however, rating agencies had few if any liabilities if their ratings were wrong. Recession declared by economists U.S. Real GDP in Billions of Current USD. Courtesy of www.bea.gov On December 1, 2008, the National Bureau of Economic Research ( NBER ) declared that the United States entered a recession in December 2007, citing employment and production figures as well as the third quarter decline in GDP. The Dow Jones Industrial Average lost 679 points that same day. On January 4, 2009, Nobel Prize -- winning economist Paul Krugman wrote, `` This looks an awful lot like the beginning of a second Great Depression. '' Rise in unemployment On September 5, 2008, the United States Department of Labor issued a report that its unemployment rate rose to 6.1 %, the highest in five years and the Congressional Budget Office forecast that the unemployment rate could reach as high as 9 % during 2010. The news report cited Department of Labor reports and interviewed Jared Bernstein, an economist : The unemployment rate jumped to 6.1 percent in August, its highest level in five years, as the erosion of the job market accelerated over the summer. Employers cut 84,000 jobs last month, more than economists had expected, and the Labor Department said that more jobs were lost in June and July than previously thought. So far, 605,000 jobs have disappeared since January. The unemployment rate, which rose from 5.7 percent in July, is now at its highest level since September 2003. Jared Bernstein, economist at the Economics Policy Institute in Washington, said eight months of consecutive job losses had historically signaled that the economy was in a recession. `` If anyone is still scratching their head over that one, they can stop, '' Mr. Bernstein said. Stocks fell after the release of the report, with the Dow Jones industrials down about 100 points after about 40 minutes of trading. New York Times CNN also reported the news, quoted another economist, and placed the news in context : `` Job losses are still mild by recession standards, but the losses are relentless and they are accumulating. If job growth had paced with population growth during this year, it would have meant 1.3 million new jobs would have been created. Instead 605,000 were lost. That means about 2 million fewer people are working than if the economy were on a steady path. And that 's a big number. But while economists generally study the payroll numbers most closely, it 's the unemployment rate that registers with most Americans when they think about the labor market. -- Bob Brusca of FAO Economics '' As of December 2008, the U1 unemployment figure was 2.8 % while U6 unemployment was 13.5 %. On January 26, 2009 a day dubbed `` Bloody Monday '' by the media, 71,400 jobs were lost in the U.S. The unemployment rate among workers with college degrees rose to 3.8 % during the first quarter of 2009. This `` pinch '' was also spreading worldwide. For all of 2008, the United States incurred a net loss of 3.617 million jobs, and for 2009, a net loss of 5.052 million jobs. Unemployment rose from 5 % in December 2007 to peak at 10 % in October 2009. Liquidity crisis Main article : Financial crisis of 2007 -- 2010 From late 2007 through September 2008, before the official October 3 bailout, there was a series of smaller bank rescues that occurred which totalled almost $800 billion. In the summer of 2007, Countrywide Financial drew down a $11 billion line of credit and then secured an additional $12 billion bailout in September. This may be considered the start of the crisis. In mid-December 2007, Washington Mutual bank cut more than 3,000 jobs and closed its sub-prime mortgage business. In mid-March 2008, Bear Stearns was bailed out by a gift of $29 billion non-recourse treasury bill debt assets. In early July 2008, depositors at the Los Angeles offices of IndyMac Bank frantically lined up in the street to withdraw their money. On July 11, IndyMac, a spinoff of Countrywide, was seized by federal regulators -- and called for a $32 billion bailout -- as the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures. That day the financial markets plunged as investors tried to gauge whether the government would attempt to save mortgage lenders Fannie Mae and Freddie Mac. The two were placed into conservatorship on September 7, 2008. During the weekend of September 13 -- 14, 2008, Lehman Brothers declared bankruptcy after failing to find a buyer ; Bank of America agreed to purchase investment bank Merrill Lynch ; the insurance giant AIG sought a bridge loan from the Federal Reserve ; and a consortium of 10 banks created an emergency fund of at least $70 billion to deal with the effects of Lehman 's closure, similar to the consortium put forth by financial titan J.P. Morgan during the stock market panic of 1907 and the crash of 1929. Stocks on Wall Street tumbled on Monday, September 15. On September 16, 2008, news emerged that the Federal Reserve might give AIG an $85 billion rescue package ; on September 17, 2008, this was confirmed. The terms of the package were that the Federal Reserve would receive an 80 % public stake in the firm. The biggest bank failure in history occurred on September 25 when JP Morgan Chase agreed to purchase the banking assets of Washington Mutual. The year 2008, as of September 17, had seen 81 public corporations file for bankruptcy in the United States, already higher than the 78 for all of 2007. The largest corporate bankruptcy in U.S. history also made 2008 a record year in terms of assets, with Lehman 's size -- $691 billion in assets -- alone surpassing all past annual totals. The year also saw the ninth biggest bankruptcy, with the failure of IndyMac Bank. The Wall Street Journal stated that venture capital funding slowed down, which in the past had led to unemployment and slowed new job creation. The Federal Reserve took steps to feed economic expansion by lowering the prime rate repeatedly during 2008. Federal reserve rates changes Date Primary discount rate Secondary discount rate Fed funds rate Apr 30, 2008 2.25 % 2.75 % 2.00 % Mar 18, 2008 2.50 % 3.00 % 2.25 % Mar 16, 2008 3.25 % 3.75 % 2.25 % Jan 30, 2008 3.50 % 4.00 % 3.00 % Jan 22, 2008 4.00 % 4.50 % 3.50 % Bailout of U.S. financial system Main article : Emergency Economic Stabilization Act of 2008 On September 17, 2008, Federal Reserve chairman Ben Bernanke advised Secretary of the Treasury Henry Paulson that a large amount of public money would be needed to stabilize the financial system. Short selling on 799 financial stocks was banned on September 19. Companies were also forced to disclose large short positions. The Treasury Secretary also indicated that money funds would create an insurance pool to cover themselves against losses and that the government would buy mortgage - backed securities from banks and investment houses. Initial estimates of the cost of the Treasury bailout proposed by the Bush Administration 's draft legislation ( as of September 19, 2008 ) were in the range of $700 billion to $1 trillion U.S. dollars. President George W. Bush asked Congress on September 20, 2008 for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis. The crisis continued when the United States House of Representatives rejected the bill and the Dow Jones took a 777 - point plunge. A revised version of the bill was later passed by Congress, but the stock market continued to fall nevertheless. The first half of the bailout money was primarily used to buy preferred stock in banks, instead of troubled mortgage assets. This flew in the face of some economists ' argument that buying preferred stock would be far less effective than buying common stock. As of mid-November 2008, it was estimated that the new loans, purchases, and liabilities of the Federal Reserve, the Treasury, and FDIC, brought on by the financial crisis, totalled over $5 trillion : $1 trillion in loans by the Fed to broker - dealers through the emergency discount window, $1.8 trillion in loans by the Fed through the Term Auction Facility, $700 billion to be raised by the Treasury for the Troubled Assets Relief Program, $200 billion insurance for the GSEs by the Treasury, and $1.5 trillion insurance for unsecured bank debt by FDIC. United States policy responses Main article : United States policy responses to the Great Recession The Federal Reserve, Treasury, and Securities and Exchange Commission took several steps on September 19 to intervene in the crisis. To stop the potential run on money market mutual funds, the Treasury also announced on September 19 a new $50 billion program to insure the investments, similar to the Federal Deposit Insurance Corporation ( FDIC ) program. Part of the announcements included temporary exceptions to section 23A and 23B ( Regulation W ), allowing financial groups to more easily share funds within their group. The exceptions would expire on January 30, 2009, unless extended by the Federal Reserve Board. The Securities and Exchange Commission announced termination of short - selling of 799 financial stocks, as well as action against naked short selling, as part of its reaction to the mortgage crisis. Recovery Several major U.S. economic variables had recovered from the 2007 - 2009 Subprime mortgage crisis and Great Recession by the 2013 - 2014 time period. The recession officially ended in the second quarter of 2009, but the nation 's economy continued to be described as in an `` economic malaise '' during the second quarter of 2011. Some economists described the post-recession years as the weakest recovery since the Great Depression and World War II. The weak economic recovery has led many to call it a `` Zombie Economy '', so - called because it is neither dead nor alive. Household incomes, as of August 2012, had fallen more since the end of the recession, than during the 18 - month recession, falling an additional 4.8 % since the end of the recession, totally to 7.2 % since the December 2007 level. Additionally as of September 2012, the long - term unemployment is the highest it has been since World War II, and the unemployment rate peaked several months after the end of the recession ( 10.1 % in October 2009 ) and was above 8 % until September 2012 ( 7.8 % ). The Federal Reserve kept interest rates at a historically low 0.25 % from December 2008 until December 2015, when it began to raise them again. However, the Great Recession was different in kind from the all the recessions since the Great Depression, as it also involved a banking crisis and the de-leveraging ( debt reduction ) of highly indebted households. Research indicates recovery from financial crises can be protracted, with lengthy periods of high unemployment and substandard economic growth. Economist Carmen Reinhart stated in August 2011 : `` Debt de-leveraging ( reduction ) takes about seven years... And in the decade following severe financial crises, you tend to grow by 1 to 1.5 percentage points less than in the decade before, because the decade before was fueled by a boom in private borrowing, and not all of that growth was real. The unemployment figures in advanced economies after falls are also very dark. Unemployment remains anchored about five percentage points above what it was in the decade before. '' Several key economic variables ( e.g., Job level, real GDP per capita, household net worth, and the federal budget deficit ) hit their low point ( trough ) in 2009 or 2010, after which they began to turn upward, recovering to pre-recession ( 2007 ) levels between late 2012 and May 2014 ( close to Reinhart 's prediction ), which marked the recovery of all jobs lost during the recession. Real median household income fell to a trough of $53,331 in 2012, but recovered to an all - time high of $59,039 by 2016. However, the gains during the recovery were very unevenly distributed. Economist Emmanuel Saez wrote in June 2016 that the top 1 % of families captured 52 % of the total real income ( GDP ) growth per family from 2009 - 2015. The gains were more evenly distributed after the tax increases in 2013 on higher - income earners. Healthcare costs in the United States slowed in the period after the Great Recession ( 2008 -- 2012 ). A decrease in inflation and in the number of hospital stays per population drove a reduction in the rate of growth in aggregate hospital costs at this time. Growth slowed most for surgical stays and least for maternal and neonatal stays. President Obama declared the bailout measures started under the Bush Administration and continued during his Administration as completed and mostly profitable as of December 2014. As of January 2018, bailout funds had been fully recovered by the government, when interest on loans is taken into consideration. A total of $626 B was invested, loaned, or granted due to various bailout measures, while $390 B had been returned to the Treasury. The Treasury had earned another $323 B in interest on bailout loans, resulting in an $87 B profit. 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Jump up ^ New York Times - U.S. Declares Bank and Auto Bailouts Over, and Profitable - December 19, 2014 Jump up ^ ProPublica - The Bailout Scorecard - As of January 22, 2018 Recessions in the United States ( notable recessions in bold ) 1796 -- 99 1815 -- 21 1836 -- 38 and 1839 -- 43 1857 -- 58 1873 -- 1879 1882 -- 85 1893 -- 1897 1907 -- 08 1918 -- 19 1920 -- 21 1929 -- 33 and 1937 -- 38 1949 1953 -- 54 1958 1960 -- 61 1969 -- 70 1973 -- 75 1980 and 1981 -- 82 1990 -- 91 2002 -- 03 2007 -- 09 History of the United States Timeline Prehistory Pre-Columbian Colonial America 's Critical Period 1776 -- 89 1789 -- 1849 1849 -- 65 1865 -- 1918 1918 -- 45 1945 -- 64 1964 -- 80 1980 -- 91 1991 -- 2008 2008 -- present Topics American Century Cities Constitution Demographic Diplomatic Economic Education Immigration Medical Merchant Marine Military Musical Religious Slavery Southern Technological and industrial Territorial acquisitions Territorial evolution Voting rights Women Portal Great Recession By region Africa Americas United States South America Asia Europe Oceania United States - specific Automotive industry crisis California budget crisis Housing bubble Housing market correction Subprime mortgage crisis Banking losses and fraud Anglo Irish Bank hidden loans controversy Libor scandal Tom Hayes Société Générale trading loss Forex scandal Seán FitzPatrick Bernard Madoff Tom Petters Scott W. Rothstein Allen Stanford Government entities Consumer Financial Protection Bureau Federal Deposit Insurance Corporation Federal Home Loan Banks Federal Housing Administration Federal Housing Finance Agency Federal Housing Finance Board Federal Reserve System Government National Mortgage Association Irish Bank Resolution Corporation National Asset Management Agency Office of Federal Housing Enterprise Oversight Office of Financial Stability UK Financial Investments Government policy and spending responses Banking and finance stability and reform Anglo Irish Bank Corporation Act 2009 Banking ( Special Provisions ) Act 2008 China -- Japan -- South Korea trilateral summit Commercial Paper Funding Facility Dodd -- Frank Wall Street Reform and Consumer Protection Act Emergency Economic Stabilization Act of 2008 Irish emergency budget, 2009 Irish budget, 2010 Irish budget, 2011 Irish budget, 2012 Irish budget, 2013 Temporary Liquidity Guarantee Program Term Asset - Backed Securities Loan Facility Troubled Asset Relief Program 2008 United Kingdom bank rescue package Bank stress tests EU U.S. Stimulus and recovery 2008 European Union stimulus plan 2008 -- 09 Keynesian resurgence American Recovery and Reinvestment Act of 2009 Chinese economic stimulus program Economic Stimulus Act of 2008 Fraud Enforcement and Recovery Act of 2009 Green New Deal Housing and Economic Recovery Act of 2008 National fiscal policy response to the Great Recession Zero interest - rate policy Government interventions, rescues, and acquisitions List of banks acquired or bankrupted during the Great Recession Non-banking Chrysler General Motors Securities involved and financial markets Auction rate securities Collateralized debt obligations Collateralized mortgage obligations Credit default swaps Mortgage - backed securities Secondary mortgage market Social responses Tea Party protests ( United States ; c. 2009 ) May Day protests ( Europe, Middle East and North Africa, Asia ; 2009 ) Occupy movement ( worldwide ) Related topics 2000s energy crisis Central Asia : 2008 Effects on museums Decline of newspapers World food price crisis European debt crisis Financial crisis of 2007 -- 08 List of countries by public debt Retrieved from `` https://en.wikipedia.org/w/index.php?title=Great_Recession_in_the_United_States&oldid=823875873 '' Categories : 2000s economic history 2010s economic history Economic collapses Economy of the United States Great Recession in the United States Hidden categories : Webarchive template wayback links Pages with citations lacking titles All articles with dead external links Articles with dead external links from October 2017 All articles with unsourced statements Articles with unsourced statements from September 2008 Articles with unsourced statements from October 2008 Articles with unsourced statements from March 2016 Talk Contents About Wikipedia Add links This page was last edited on 3 February 2018, at 23 : 55. 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Question: what caused the last recession in the us
Answer: Following the bursting of the housing bubble in mid-2007, and the housing market correction and subprime mortgage crisis the following year