Light

Great Recession

Definition

The Great Recession was a severe worldwide economic crisis that took place from December 2007 until June 2009. It was sparked by a downturn in housing markets among other factors and resulted in long-term unemployment and global financial instability.

Analogy

Imagine you're playing Jenga - everything seems stable until one wrong move causes all blocks (or economies) tumble down rapidly. That's what happened during the Great Recession; once one part of economy faltered (housing market), it set off chain reactions affecting various sectors globally.

Related terms

Subprime Mortgage Crisis: This was one key factor leading up to Great Recession where banks gave loans to borrowers who were high risk, leading to a large number of defaults and financial instability.

Stimulus Package: This is a set of economic measures put in place by a government to stimulate a struggling economy. In response to the Great Recession, the U.S. government passed stimulus packages to try and boost the economy.

Unemployment Rate: This refers to the percentage of unemployed workers in the total labor force. During the Great Recession, unemployment rates skyrocketed as businesses closed or downsized.