The Great Recession’s great hangover

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.