Economic shifts: reconciling observations and rhetoric within the U.S. economy

Abstract

For the American people, déjà vu arrived in December 2007, and for the former President of the United States, Barack Obama, it was when he was inaugurated on 20 January 2009, inheriting the worst financial crisis since the Great Depression of 1929. At the start of the 2007, financial crisis the United States (U.S.) was experiencing a boom in consumer spending. This came to an abrupt halt when the U.S. housing market collapsed resulting in an $8 trillion dollar housing debt and a steep decline in equity prices. Fallout from the housing crisis quickly spread to the broader economy through a complex web of unclear financial instruments tied to housing and dubious business practices of some financial firms. The resulting loss of wealth led to cutbacks in U.S. credit backed consumer spending. According to the U.S. Department of Labour1, roughly, 8.7 million jobs were shed from February 2008 to February 2010, and GDP contracted by 5 percent, making this the Great Recession the worst since the Great Depression.