Cost of the Great Recession
Our conservative estimate is $50,000 to $120,000 for every U.S. household
– Federal Reserve Bank of Dallas (FRBD), September 2013
The totals are in. The FRBD tallied up and quantified the overall financial cost of the Great Recession. They redefined it a “financial crisis”.
The FRBD published their analysis this month in a fascinating report with a dry title:
“Assessing the Cost and Consequences of the 2007-09 Financial Crisis and its Aftermath“
Summarizing their sobering discoveries:
- $50,000-$120,000 lost per household
- 12% loss of output per person
- $12-$13 trillion in “extraordinary” government support
- $11.7 trillion in lost output
- 11.5 million unemployed as of July 2013
- 10.6 million underemployed
- Up to one GDP growth year of lost production
- One to two GDP growth years of lost consumption
- An added GDP growth year lost to “national trauma” and “opportunity”
- “The path of future output may be permanently lower than before“
The wide range of FRBD estimates depends on how long it will take to get to full recovery. If long, then the higher estimates are right.
Worse news is that the GDP growth curve looks like it has been permanently reset lower.
The worst news of all is it looks like the slope of the growth curve is less than before the crisis.
If that is the case, and according to the FRBD it looks like it is, then all the costs of the financial crisis will be higher than their highest estimates!!!
That defines a “financial crisis” of epic proportions. It’s no wonder we haven’t recovered.