The worst global economic downturn since the Great Depression, the Great Recession contracted output and employment across most developed economies from 2007 to 2009.
Key Facts
- Duration (U.S.)
- December 2007 – June 2009
- U.S. recession length
- 19 months months
- IMF characterization
- Most severe meltdown since the Great Depression
- Housing bubble burst
- United States, 2005–2012
- Peak banking crisis
- September 2008
By the Numbers
Cause → Event → Consequence
Weaknesses accumulated in the global financial system over years, culminating in the burst of the U.S. housing bubble beginning around 2005. Falling home prices caused homeowners to default on mortgages, eroding the value of mortgage-backed securities held by investment banks and triggering the subprime mortgage crisis of 2007–2008.
From late 2007 to mid-2009, economies across the developed world experienced a severe, sustained contraction. Several major banks collapsed or required government bailouts in September 2008. The IMF described the episode as the worst economic and financial meltdown since the Great Depression of the 1930s, though its severity varied significantly by country.
Banks became unable to extend credit to businesses, while households redirected income toward paying down debt rather than spending, deepening the downturn. Most developed economies in North America, South America, and Europe suffered severely, while major developing economies such as China, India, and Indonesia continued to grow, and Oceania experienced minimal impact.