Great Recession

Quick Facts: Who was Great Recession?

Subject:

Great Recession

Known for:

A severe global economic contraction spanning late 2007 to mid-2009, linked to housing market collapse.

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2Day Chrono-Wiki & Primary Historical Archives

Origins & Early Life

The Great Recession was a period of contraction in economies around the world (particularly in the western world and associated countries) that occurred from late 2007 to mid-2009, overlapping with the closely related 2008 financial crisis. The scale and timing of the recession varied from country to country (see map). At the time, the International Monetary Fund (IMF) concluded that it was the most severe economic and financial meltdown since the Great Depression of the 1930s. The Great Recession was caused by many weaknesses that slowly developed in the global financial system, along with a series of concurrent and triggering events that began with the bursting of the United States housing bubble, which had formed in 2005 and lasted until 2012. When housing prices fell and homeowners began to abandon their mortgages, the value of mortgage-backed securities held by investment banks declined sharply in 2007–2008, causing several banks to collapse or be bailed out in September 2008.

Career & Major Achievements

This 2007–2008 phase became known as the subprime mortgage crisis, referring to borrowers of lesser payment capacity as subprime debtors. The combination of banks being unable to provide funds to businesses (also known as the credit crunch) and homeowners forsaking or paying down their debts (rather than borrowing and spending) resulted in the Great Recession. In the U.S., the recession officially began in December 2007 and lasted until June 2009, thus extending over 19 months. As with most other recessions, it appears that no known formal theoretical or empirical model succeeded in accurately predicting the onset of this recession, except for minor signals in the sudden rise of forecast probabilities, which were still well under 50%. The recession was not felt equally around the world.

Enduring Legacy & Impact

Whereas most of the world's developed economies, particularly in North America and Europe, fell into a severe, sustained recession (with international trade and financial contagion spreading into developing countries in Latin America and Africa), far less impact occurred in many more-recently developing economies, particularly in China, India and Indonesia, whose economies grew substantially during this period. Similarly, Oceania suffered minimal impact, in part due to its proximity to Asian markets. Two definitions of the term "economic recession" exist: one sense referring generally to "a period of reduced economic activity" and ongoing hardship; and a technical definition used in economics, which is defined operationally, specifically the contraction phase of a business cycle with two or more consecutive quarters of GDP contraction (negative GDP growth rate). The latter is typically used to influence abrupt changes in monetary policy. Under the technical definition, the recession ended in the United States in June or July 2009.

Chronological Milestones & Life Events

1. 2005: 2005 Milestone — The Great Recession was caused by many weaknesses that slowly developed in the global financial system, along with a series of concurrent and triggering events that began with the bursting of the United States housing bubble, which had formed in 2005 and lasted until 2012.
2. 2007: 2007 Milestone — The Great Recession was a period of contraction in economies around the world (particularly in the western world and associated countries) that occurred from late 2007 to mid-2009, overlapping with the closely related 2008 financial crisis.
3. 2009: 2009 Milestone — Under the technical definition, the recession ended in the United States in June or July 2009.

Notable Quotes by Great Recession

“Paul Krugman once commented on this as seemingly the beginning of "a second Great Depression".”

Historical Fact-Check Quiz: Great Recession

True or False: “The International Monetary Fund (IMF) declared the Great Recession a global recession based on quarterly GDP data.”

Answer (FALSE ❌): The IMF only met its criteria for declaring a global recession in the single calendar year of 2009.

Contemporary Figures & Related Historical Timelines

• Al Oerter — Historical peer (Died in 2007) (2007): Four-time Olympic champion in the discus throw, pioneering athletic consistency.
• Albert Ellis — Historical peer (Died in 2007) (2007): Pioneering figure in psychotherapy, founder of Rational Emotive Behavior Therapy (REBT)
• Aage Bohr — Historical peer (Died in 2009) (2009): Pioneering Danish nuclear physicist, Nobel laureate for atomic structure theory.
• Abdurrahman Wahid — Historical peer (Died in 2009) (2009): Influential Indonesian politician, Islamic leader, and fourth President known for pluralism.
• Ahn Jae-hwan — Historical peer (Died in 2008) (2008): South Korean actor known for roles in films like Beautiful Temptation and Show Show Show.
• Aimé Césaire — Historical peer (Died in 2008) (2008): Afro-Martinican poet, politician, and founder of the Négritude movement.
• Ahmed Zaki (actor) — Historical peer (Died in 2005) (2005): Iconic Egyptian actor celebrated for intense dramatic performances and masterful impersonation.
• Akira Yoshizawa — Historical peer (Died in 2005) (2005): Japanese origamist, credited with elevating origami from a mere craft to a recognized living art.
• Adam Yauch — Historical peer (Died in 2012) (2012): Founding member of Beastie Boys; influential rapper, filmmaker, and Tibetan activist.
• Adrienne Rich — Historical peer (Died in 2012) (2012): Influential American poet, essayist, and leading voice in feminist literary discourse.

Frequently Asked Questions about Great Recession