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Business Encyclopedia Entry 1783906025

** A comprehensive overview of the **Global Economic Downturn (GED)**, a significant economic phenomenon that occurred in the late 2000s, affecting numerous countries worldwide. **CONTENT:** ### Overview The **Global Economic Downturn (GED)**, also known as the **Great Recession**, was a severe economic downturn that lasted from 2007 to 2009. It was a global phenomenon, affecting nearly every country in the world, and is considered one of the most significant economic events of the 21st century. The GED was characterized by a sharp decline in economic activity, a significant increase in unemployment, and a severe contraction in international trade. The GED was triggered by a combination of factors, including a housing market bubble in the United States, excessive leverage in the financial sector, and a global credit crisis. As the housing market began to collapse, banks and other financial institutions found themselves with large amounts of toxic assets on their balance sheets, leading to a credit crisis that spread rapidly around the world. The resulting economic downturn was severe, with many countries experiencing recession, and some even experiencing depression-like conditions. ### History/Background The GED has its roots in the early 2000s, when the US housing market began to experience a significant boom. Easy credit and lax lending standards led to a surge in housing prices, which in turn fueled a housing bubble. As the bubble began to burst in 2006, the housing market began to decline, leading to a sharp increase in foreclosures and a subsequent decline in housing prices. This had a ripple effect on the broader economy, as banks and other financial institutions found themselves with large amounts of toxic assets on their balance sheets. In 2007, the credit crisis began to spread, as banks and other financial institutions found themselves unable to access credit. This led to a sharp decline in economic activity, as businesses and consumers were unable to access the credit they needed to operate. The GED was officially declared in December 2007, when the National Bureau of Economic Research (NBER) announced that the US economy had entered a recession. ### Key Information * **Duration:** The GED lasted from 2007 to 2009, with some countries experiencing recession for longer periods. * **Global Impact:** The GED affected nearly every country in the world, with many experiencing recession and some even experiencing depression-like conditions. * **Unemployment:** Unemployment rates soared during the GED, with some countries experiencing unemployment rates of over 20%. * **International Trade:** International trade declined sharply during the GED, as countries imposed protectionist measures to protect their domestic industries. * **Monetary Policy:** Central banks around the world implemented expansionary monetary policies, including quantitative easing and interest rate cuts, to stimulate economic growth. * **Fiscal Policy:** Governments around the world implemented fiscal stimulus packages to stimulate economic growth. ### Significance The GED was a significant economic event that had far-reaching consequences for the global economy. It led to a significant increase in unemployment, a decline in international trade, and a sharp contraction in economic activity. However, it also led to a number of important policy changes, including the implementation of stricter financial regulations and the establishment of new international financial institutions. The GED also led to a significant increase in income inequality, as the wealthy were able to weather the storm more easily than the poor. It also led to a decline in economic mobility, as many people found themselves unable to access credit and other economic opportunities. ### INFOBOX: - **Name:** Global Economic Downturn (GED) - **Type:** Economic Phenomenon - **Date:** 2007-2009 - **Location:** Global - **Known For:** Severe economic downturn that affected nearly every country in the world. ### TAGS: Global Economic Downturn, Great Recession, Housing Market Bubble, Credit Crisis, Unemployment, International Trade, Monetary Policy, Fiscal Policy, Income Inequality, Economic Mobility.