In the Ruins of the 2008 Crash: The Social and Political Costs of the Financial Crisis
A decade after global financial upheaval, it is increasingly clear that there will never be a return to the old ‘normal’.
Although from the beginning of what has come to be called the Great Recession, economic growth began to tick upward and unemployment downward, the financial crisis left the nation with deep cultural and psychological scars. That’s not surprising: by one Federal Reserve estimate, the country lost almost an entire year’s worth of economic activity – nearly $14 trillion – during the recession from 2007 to 2009.
Compared to the pre-crisis trend, by 2016 the crisis had cost the country 15% of GDP per capita, or $4.6 trillion. For a better understanding of the scale of the tragedy — the crisis cost every single American approximately $70,000, according to a 2018 study by the Federal Reserve Board.
“Just in dollar terms, the crisis was arguably the most significant event of the 21st century so far, and the largest single economic downturn since the Great Depression. If the only effects of the financial crisis were economic, it would still be worth revisiting 10 years later,” Harvard Business Review reports.
In the meantime, the most important effects of the financial crisis are not economic but political and social.
The crisis was followed by sharp increases in political polarization and the rise of populist movements in the U.S. as well as beyond its borders, culminating in the election of Donald Trump — by some measures the country’s most polarizing president ever. Such a turmoil is a predictable response to financial crises across eras and countries.
What is the climate of America today? New radical politics on both left and right; strident, ideological pop culture obsessed with various apocalypses; an internet full of fake news powered by strife, envy, and endless entrepreneurial hustle; opiates and suicides and high infant mortality rates; gender-based violence and racial discrimination.
In a 2016 survey by the Fed, 28 percent of working-age adults said they had no retirement savings whatsoever.
The racial wealth gap, already large, ballooned.
In terms of household wealth, every group suffered — but some more than others.
Consumer credit-card debt at the end of 2017 was over $1 trillion (about 30% higher than in 2008). Millennials have taken on at least 300 percent more student loan debt than their parents’ generation.
The unemployed took many more weeks to find work: from 7.9 in May 2008 to 25.2 in June 2010.
A new CreditCards.com survey shows that more than 2 out of 3 U.S. adults (68 percent) don’t know when, or if, they will ever be debt-free.
In 2017, women had nearly 500,000 fewer babies than in 2007, although there were 7 percent more women of prime childbearing age.
79 million Americans live in a “shared household” with at least one extra, non-family resident. More college grads moved in with their parents: 28 percent in 2016 against 19 percent in 2005.
According to a 2017 report from real estate data and search site Trulia, only 34.2% of homes have recovered their value from before the recession. From 2000 to 2015, home ownership declined in 90% in all U.S. metropolitan areas.
America stopped believing in the American dream
“The mood in America is arguably as dark as it has ever been in the modern era. The birthrate is at a record low, and the suicide rate is at a 30-year high; mass shootings and opioid overdoses are ubiquitous. Today’s America is marked by fear and despair more akin to what followed the crash of 1929, when unprecedented millions of Americans lost their jobs and homes after the implosion of businesses ranging in scale from big banks to family farms,” writes Frank Rich from Daily Intelligencer, adding that “everything in the country is broken.”
According to results from the World Happiness Report 2018, levels of happiness in the United States are falling, and it appears to be due to a “social crisis.” In the past decade, the US has fallen 16 places on the list of the happiest countries, one of the biggest drops in the world. All in all, what’s clear is that although the storm of the financial crisis has passed, the cloud of uncertainty still hovers over the American financial system. Whether this cloud turns into a storm similar to what that of 2008, only time will tell.