The financial crisis and Great Recession had their roots in American homeownership. Successive presidents from both parties had encouraged more people to attain the American Dream of owning a home.

As housing prices rose — and Wall Street found ways to enable riskier loans — Americans’ wealth climbed too, hitting a peak in 2007. But then the financial crisis and Great Recession hit, devastating Wall Street and causing financial upheaval for tens of millions of Americans. Even as the worst days waned, the crisis and recession profoundly shaped the decade that followed.

How it changed Americans

Most Americans still aren’t as rich as they were before. That’s especially true for African Americans.

Even though the stock market has climbed and the housing market has largely recovered from the crisis, ordinary Americans as of 2016 hadn’t made up all the ground they lost after the financial crisis. That’s especially true for African Americans. Here is the median family wealth by race/ethnicity.

Recession

$200K

White

100K

Hispanic

Black

0

1998

’16

Recession

$200,000

White

100,000

Hispanic

Black

0

1998

2016

Americans coming of age after the Great Recession aren’t buying homes like their parents did.

With home prices rising, mortgage lending constrained and younger Americans burdened with higher levels of student debt, fewer people under 44 own homes than at any time in recent history. Here is the percentage point change in homeownership by age of householder.

Under 35

35 to 44

45 to 54

55 to 64

65 and over

0

-5

Recession

-10

2007

’18

0

65 years and over

55 to 64

45 to 54

-5

Under 35

35 to 44

Recession

-10

2007

2018

Fewer working-age people are working or looking for work.

The unemployment rate today is very low, but the labor force still hasn’t healed completely. Some people lost to the recession may never make it back to work. The low level of labor-force participation deprives the economy of workers at a time when the baby boomer retirement wave also means fewer people are in jobs. Here is the percentage point change in the civilian labor force participation rate since 1997 for people ages 25 to 54.

Recession

0

−2

−4

1997

‘18

Recession

0

−2

−4

2018

1997

Some places were slow to recover, fueling political upheaval.

The recovery left some parts of the nation particularly behind. Donald Trump, who lost the popular vote in 2016, earned nearly 60 percent of voters’ support in the fifth of the population living in the U.S. counties that recovered the slowest. Here is the change in jobs since each recession began, based on the 12-month average.

The 20 percent of the population living in counties that supported Donald Trump most strongly in 2016

All other counties in the country

2001 recession

10%

5

0

−5

Recession

−5%

2002

‘08

2008 recession

10%

5

0

−5

−10%

2008

‘18

The 20 percent of the population living in counties that supported Donald Trump most strongly in 2016

All other counties in the country

2001 recession

2008 recession

Recession

10%

5

0

−5

−10%

2002

2008

2008

2018

It wasn't until the past year that the counties that supported Trump most strongly have recovered the jobs lost in the recession — about five years after the equivalent group of Hillary Clinton-leaning counties, and three years after the groups in the middle. Here are all the U.S. counties that saw a decline in total employment from December 2007 to June 2018, based on 12-month averages.

0%

-10%

-6%

-3%

-15%

-6%

-3%

0%

-10%

-15%

How it changed America’s economy

Only last year did the economy finally reach its potential.

It wasn’t until the fall of 2011 that the economy was finally larger than it was before the Great Recession. But it was still much smaller than what economists believe it could have been – a statistic known as potential GDP that measures how strong the economy could be under optimal conditions. Only last year did the economy reach its potential. Here is potential vs. reported U.S. GDP.

AREA OF CHART

AT FULL SCALE

$20T

Reported GDP

Estimated potential GDP

0

Recession

$20T

18T

16T

2005

‘18

Recession

$20T

Estimated

potential

GDP

AREA OF CHART

AT FULL SCALE

18T

$20T

Reported GDP

16T

0

2005

2018

The recession blew a hole in government finances, and the debt continues to rise.

The financial crisis and Great Recession were very expensive for American taxpayers — and, by extension, future taxpayers who will be on the hook for the nation’s public debt. The recession deprived trillions of dollars in tax revenue, then required more than a trillion dollars of stimulus to help stop the bleeding. Taxpayers will be footing the bill for a generation. Here is the federal debt held by the public as percentage of GDP.

Recession

100%

75

50

25

0

1970

‘18

Recession

100%

75

50

25

0

1970

2018

The Federal Reserve still carries the scars of the last recession, leaving it less prepared to fight a new crisis.

While the rest of government took a step back as the crisis faded from memory, the Fed kept its foot on the pedal, buying trillions of dollars of Treasury bonds and mortgage bonds to try to stimulate growth. The central bank is now only starting to wind down the efforts — a process that could inflict economic pain if not managed delicately. Below are the total assets held by Federal Reserve banks.

Recession

$6T

4T

2T

0

2002

‘18

Recession

$6T

4T

2T

0

2018

2002

The crisis reordered the giants of finance in America.

Today, the financial sector is strong again. Some of the banks that survived — led by JPMorgan Chase, Bank of America, and Wells Fargo — are bigger than ever. Others, like AIG, Fannie Mae and Lehman Brothers, are much smaller or non-existent. The financial sector represents about 14 percent of the overall stock market, compared with 18 percent before the crisis. Below are the 20 largest financial companies in each month, sized by market value.

Companies not in the top 20 in 2007

October 2007

JPMorgan

Chase

AIG

Citigroup

Wells

Fargo

Bank of

America

Fannie

Mae

Berkshire

Hathaway

Merrill

Lynch

March 2009

August 2018

Wells

Fargo

Berkshire

Hathaway

JPMorgan

Chase

PNC

AIG

Bank of America

August 2018

October 2007

Wells

Fargo

Berkshire

Hathaway

Companies not in

the top 20 in 2007

JPMorgan

Chase

AIG

Citigroup

Wells

Fargo

March 2009

Bank of

America

JPMorgan

Chase

PNC

Fannie

Mae

AIG

Berkshire

Hathaway

Bank of America

Merrill

Lynch

August 2018

October 2007

Companies not in

the top 20 in 2007

Wells Fargo

Citigroup

Berkshire Hathaway

JPMorgan

Chase

AIG

Citigroup

American

Express

Goldman

Sachs

U.S.

Bancorp

Goldman

Sachs

Amex

Wells Fargo

March 2009

Morgan

Stanley

JPMorgan Chase

Bank of America

PNC

CME

Morgan

Stanley

Berkshire

Hathaway

S&P

Global

BlackRock

Fannie

Mae

AIG

JPMorgan

Chase

Berkshire

Hathaway

Bank of America

Charles

Schwab

Merrill

Lynch

How it changed the global economy

The recession slowed major economies, allowing China to surge ahead.

The Great Recession accelerated a changing of the guard among global powerhouses. As almost every developed nation saw their economy shrink in 2008 and 2009, China’s grew. It allowed the world’s most populous country to catch up with the world’s powers and pass Japan to become the world’s second-largest economy. Below is the gross domestic product of the world’s largest economies, 10 years before and after the recession.

Recession

$20T

United

States

15T

Euro Zone

China

10T

Japan

5T

United

Kingdom

Canada

0

1997

2017

Recession

$20T

United States

15

Euro Zone

China

10

5

Japan

United Kingdom

Canada

0

1997

2017

Now Chinese banks are among the largest in the world.

Before the crisis, European banks represented seven of the largest banks in the world, while Japan had two top ten banks and the U.S. had one. But the decimation of the U.S. and European banking industry during the crisis and the difficult recovery has reshaped the world’s financial landscape. Below are the top ten banks by assets globally in 2007 and 2017.

Headquarted in

E.U.

U.S.

2017

Japan

China

Industrial &

Commercial

Bank of China

2007

China Construction

Bank

Royal Bank of

Scotland Group

Agricultural Bank

of China

Deutsche Bank

BNP Paribas

Bank of China

Barclays

Mitsubishi UFJ

Financial Group

HSBC Holdings

JPMorgan Chase

Credit Agricole

Group

HSBC Holdings

Citigroup

BNP Paribas

Japan Post Bank

Bank of America

UBS Group

Credit Agricole

Group

Mitsubishi UFJ

Financial Group

Headquarted in

2017

E.U.

U.S.

Japan

China

Industrial & Commercial

Bank of China

2007

China Construction Bank

Royal Bank of Scotland Group

Deutsche Bank

Agricultural Bank of China

BNP Paribas

Bank of China

Barclays

Mitsubishi UFJ Financial Group

HSBC Holdings

JPMorgan Chase

Credit Agricole Group

HSBC Holdings

Citigroup

BNP Paribas

Japan Post Bank

Bank of America

UBS Group

Credit Agricole Group

Mitsubishi UFJ Financial Group

Global debt has hit a new record, raising fears of a new peril.

While regulators took steps to prevent another crisis, investors have looked for new and risky opportunities around the world. That has enabled a surge in leverage worldwide, this time driven in large part by businesses and banks in emerging markets like Turkey and China. Concerns are now increasing that these countries may have overborrowed and overspent, perhaps risking economic crises once again. Below are global debt levels from 2000 to 2017.

Recession

$250T

Households

200T

Financial

corporations

150T

100T

Government

50T

Non-financial

corporations

0

2000

2017

Recession

$250T

Households

200T

Financial

corporations

150T

Government

100T

50T

Non-financial

corporations

0

2000

2017

Zachary Goldfarb, Reuben Fischer-Baum, Andrew Van Dam and Brittany Mayes contributed to this report.

About this story

Median wealth data is from an Urban Institute analysis of the Survey of Consumer Finances. Homeownership rates based on Current Population Survey data and Housing Vacancies and Home Ownership surveys. Data on labor participation, potential U.S. GDP, federal debt, and total assets held by Federal Reserve banks is from the Federal Reserve. County employment rates are from the Quarterly Census of Employment and Wages. The 20 largest financial companies are from Bloomberg. Global GDP data is from the International Monetary Fund. The 10 largest banks globally is courtesy of S&P Global Market Intelligence. Global debt levels are sourced from Institute of International Finance.

Photo for photo illustration by Daniel Acker/Bloomberg News.

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