The Great Recession
The “Great Recession” of 2009 is often compared to the “Great Depression” of the 1930’s. Both had a significant impact in the United States as a whole, but the impact of the “Great Depression” was felt much longer. An economic recession is faced when there is a significant decline in the activity of the economy’s GDP that lasts for two consecutive quarters. The GDP is an “indicator of the value of goods and services produced by the labor force and property of a country” (Define Economic Recession, n.d.). The economy slows down as a result of a decline in the GDP and from that point productions of goods decrease, consumers buy less, demands for goods decrease, supplier’s labor needs decrease, and eventually jobs are lost which impacts our unemployment rate. The difference between a “recession” and a “depression” is the difference in the GDP decline. Declines of more than 10% are referred to as a “depression”, whereas declines less than 10% are referred to as a “recession”. A lengthy recession can and will likely develop into a depression (Define Economic Recession, n.d.).
The most recent recession that the United States has faced is known as the “Great Recession”. This recession is also referred to as “The 2008 Recession” and the “Great Recession of 2009”. However, it is noted that this recession technically began in December of 2007. The National Bureau of Economic Research (NBER) confirmed through research that the recession did in fact begin in 2007(Isidore, 2008). It is believed by many that this recession was caused by the downturn of the housing market in 2007. Mortgage underwriting standards were lowered in an effort to encourage and increase home ownership and essentially loans were offered to people that were less likely to be able to afford a mortgage. Unfortunately, this decision caused the housing market to decline due to an enormous amount of defaults on...
References: Temin, P. (1989). Lessons from the Great Depression. MIT Press.
Himmelberg, R. F. (2001). Great Depression and the New Deal. Greenwood Press.
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