Other meanings of Recession
Economics
The Recession is a colloquial term, primarily used in the United States, that refers to the Great Recession of 2007–2009, the most severe global economic downturn since the Great Depression. It was triggered by the collapse of the U.S. housing bubble and the ensuing global financial crisis, marked by the failure of major financial institutions, a sharp contraction in credit, and a prolonged period of high unemployment. The term is often used by economists, policymakers, and the media to denote this specific period, distinguishing it from other recessions in history.
The Recession was precipitated by the bursting of the United States housing bubble, which had been inflated by a decade of easy credit, low interest rates, and the proliferation of subprime mortgages. Financial institutions had bundled these risky loans into mortgage-backed securities and collateralized debt obligations, which were sold globally as safe investments. When housing prices began to fall in 2006, defaults surged, and the value of these securities collapsed, causing severe losses at banks and other financial firms. The crisis peaked in September 2008 with the bankruptcy of Lehman Brothers, which triggered a global panic and a freeze in interbank lending. The U.S. Federal Reserve and the Treasury responded with unprecedented interventions, including the Troubled Asset Relief Program (TARP) and near-zero interest rates, but the damage had already spread worldwide.
The Recession was a global phenomenon, with virtually every advanced economy entering a downturn. The United Kingdom, the Eurozone, and Japan all experienced deep contractions, while emerging markets such as China and India saw slower growth but avoided outright recession. International trade collapsed, with global trade volumes falling by more than 12% in 2009, the sharpest decline since World War II. Governments and central banks around the world coordinated fiscal stimulus packages and monetary easing, with the G20 committing to a $1.1 trillion package in April 2009. The crisis also exposed weaknesses in the European banking system, leading to the subsequent European sovereign-debt crisis. The International Monetary Fund estimated that the global output loss exceeded $2 trillion, and the effects on public debt and potential growth persisted for years.
The human cost of The Recession was profound: in the United States, unemployment peaked at 10% in October 2009, and long-term unemployment reached record levels. Millions of households lost their homes to foreclosure, and household wealth fell by trillions of dollars, disproportionately affecting minority and low-income communities. The crisis accelerated the trend of income inequality, as the recovery was uneven, with corporate profits and stock markets rebounding much faster than wages. In Europe, austerity measures implemented in response to rising public debt led to social unrest and political upheaval, including the rise of anti-establishment parties. The Recession also had lasting demographic effects, with a sharp decline in birth rates and an increase in mortality among middle-aged white Americans, a phenomenon later termed 'deaths of despair' by economists Anne Case and Angus Deaton.
Beyond the headline events, The Recession had several overlooked dimensions. For instance, the crisis led to a surge in 'underemployment' and a rise in the number of workers taking part-time jobs involuntarily, a trend that persisted well into the recovery. The recession also triggered a boom in 'sharing economy' platforms like Uber and Airbnb, as people sought alternative income sources. In Iceland, the crisis caused the collapse of all three major banks, leading to a unique response where the government allowed them to fail and imposed capital controls, resulting in a faster recovery than in many other countries. The term 'The Recession' itself became a cultural reference point, with the 2010 film 'The Company Men' and the book 'The Big Short' by Michael Lewis, which later became a popular movie, bringing the crisis to public consciousness. Additionally, the crisis prompted a wave of regulatory reforms, including the Dodd-Frank Act in the U.S. and the Basel III international banking standards, which aimed to prevent a recurrence.
The term 'The Recession' is often used interchangeably with 'Great Recession' in U.S. discourse, though the latter is more formal.
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