For those of you who experienced the 2008 recession, I’m curious to know were prices and, inflation so high and the economy so bad as it is right now.
even though we’re not formally in a recession yet, but people keep saying ‘recession indicators’ or alluding to things being similar to how it was in 2008 and before.
How was it like though? Before the 2008 recession was declared and after. Just so I have that hope that maybe just maybe things get better.
How were things during the 2008 recession and before?
byu/Ina_connundrum28 ineconomy
Posted by Ina_connundrum28
24 Comments
I just graduated from tech school with an associates degree in electronics and went to build rescue helicopters. I stayed gainfully employed and went back to school for electrical engineering.
I wish I had money in 2008-2012 to buy a house or 2. I’d be retired today, probably living on a beach 🏝️ sipping boar drinks 🍹
In 2011, I was offered a job I really wanted to work on a new aircraft platform, and that same year, Obama introduced sequestration so the company repealed the job offer. I was very sad.
I have since moved on…. 🤷🏻♀️😭🤣
Before 2008 we were all sitting pretty. So good that people were putting spinning wheels on cars.
Before 2008 Great Recession: boom times and it seemed like the party would never stop.
Great Recession: many people lost their homes after losing their jobs. It was a good time to have cash at the ready for both emergencies, stockpile stuff at lower prices, and to buy a house. Congress passed a $10,000 tax credit to help out. Of course, the banks got a bailout, too.
I don’t wish any of us another Great Recession but we could use a “garden variety” recession to lower demand and aggregate price levels to 2022 levels.
2008 was different then today. I don’t recall inflation being an issue, the biggest issue was jobs and unemployment. Keeping your job and avoiding layoffs was the most important thing on people’s mind. If you had your job you could keep your mortgage payments and home. Unemployment numbers creeping up several months before official market crash was the recession indicator. We don’t have unemployment issues right now.
I will say that the entire decade (2001-2010) was a disaster. It started with dotcom bust in late 2000 but it was a mild recession (Feb – Nov). It was the (mis)handling of it, in typical republican fashion, starting warfare, one using 9/11 for an excuse and the other on fake WMD cry, in typical republican fashion, topped it. Job growth was abysmal for most part and deficits on the rise. Economy (and job growth) was already stagnant in late 2006, two years before the floodgates opened, and destroyed the middle class.
Literally hundreds of thousands of jobs were lost every month for like 2 years. I think it peaked at 700k lost jobs in one month. The stock market was just in absolute free fall after lehman collapsed. The wave of housing price decline and foreclosures that ensued in the following few years was like nothing anyone had ever seen. It was catastrophic.
I dont think inflation pre crash was a real issue but certainly housing prices and construction was booming and everyone thought the party was going to keep going.
The economy today is nothing like 2008 and anyone who says otherwise did not experience the recession. People complain about not being able to find jobs now and while that is true, it is absolutely nothing like the recession. Not only could you not find jobs, but if a job did become available, people would flock to it and stand in lines competing with other career professionals for cashier jobs. the economy right now is in no way great but it is absolutely not comparable to the great recession.
What I remember is people losing houses as their 5 year arm mortgages were resetting much higher and the first time gas prices really shot up. The amount of people on the roads really dropped due to cost of gas.
The pre-2008 period actually felt deceptively good on the surface for most people because home prices were rising, credit was easy, unemployment was low, and the general mood was one of confidence that the good times were structural rather than borrowed, which is part of what made the crash so psychologically devastating when it hit because nobody had mentally prepared for how bad it could get. The inflation picture today is actually quite different from 2008, that crisis was primarily a credit and housing collapse rather than an inflation problem, and the recession that followed was deflationary as asset prices fell and consumer spending cratered, whereas today’s challenge is the combination of sticky inflation with slowing growth, which is a harder policy problem because the Fed cannot cut rates to stimulate without risking making inflation worse. Things got significantly better after 2008, unemployment peaked around 10% in late 2009 and spent the next decade falling, the stock market bottomed in March 2009 and then went on one of the longest bull runs in history, and the structural reforms that followed, however imperfect, reduced the specific financial system fragilities that caused the collapse. Every recession in history has eventually ended, and the recoveries that followed rewarded the people who stayed invested, kept their expenses manageable, and did not make permanent decisions based on temporarily terrible conditions.
Better question is how were thing before Regan was elected.
Prices for homes were shooting up, my friend and my sister both bought places and each actually said “ if I don’t buy now I won’t be able to afford anything” a little over a year later they were both under water owing more to the bank than the homes were worth.
Prices and inflation were low because lots of people were unemployed and poor. Gas was super inexpensive, went from$4+ in 2008 to $2 range in 2009.
I think there is a confusion about what a recession is. Inflation happens when there is rapid growth and extra money supply in circulation. Recession is the opposite.
Government is printing more money now than they did then which keeps us out of recession but keeps inflation higher.
2009 was awesome for rich people to scoop up assets at a discount but rough for families that depended on having jobs to pay the bills.
Was the 2008 recession caused by bank deregulation? Sub-prime mortgages were largely the cause but were they created as a result of dereg?
It seems like every time there’s massive deregulation, planes fall from the sky, trains derail and spill toxic chemicals, and financial institutions fail causing a rift in the economy.
2008 was different. I don’t really recall inflation as a problem. It was a massive spend party leading up to it since regular folks were buying huge homes and bankers were reeling in massive profits.
A lot of people had houses they couldn’t afford and should have never been in but banks didn’t care and were cashing in.
Then balloon payments hit, defaults went up, banks and mortgage lenders cratered. The economy went into a tailspin, and companies contracted which worsened the cycle.
People started walking from homes because even if they could afford it, who wanted an asset multiple years of salary underwater.
Then more banks cratered and get this… The government used taxpayer dollars to shore up banks that (1) caused it all and (2) were still giving out significant pay packages as they did NOTHING for regular people that those same banks were kicking into homelessness.
I watched a lot of people lose everything while the bank bros walked away making money on the front and back end of it.
This time around you have companies regularly laying off people while rising costs are hitting everyone no matter what any one particular person has done. I’d call it the aftermath of COVID that the Fed has done a good job rebuilding from and that ONE SINGULAR PERSON is doing his best to unravel.
The Fed prints in response to or to prevent any recession. You have to own stocks, a house, or otherwise set yourself up to benefit from that. There can be a delay in printing you have to get through. Things will get better for those who get the free money, mostly the already wealthy of course, and worse for those who don’t.
Just graduated the year before. Things seemed great…until after the Summer Olympics. Then things got dark and fast. I was stuck at the job until 2011. I got a Master’s Degree to pass the time. I was lucky to keep that job w/ benefits.
I left that job and promptly purchased my home a year later. Grateful that I was prepared to purchase and was able to take advantage of low prices and rates. My mortgage was cheaper than my rent. I was already paying less than $700, then.
>…the economy so bad as it is right now
What evidence do you have that the economy is “so bad” right now?
i remember so many people losing their jobs and filing foreclosure on their houses while i was still in high school
For my father it was actually an amazing year. He was a farrier who had a lot of customers that rode dressage horses. They would usually move to Florida with their hordes during the winter, we lived in Massachusetts. That year because of the recession most of them stayed home and didn’t leave. We ended up making good money for a few years.
Things felt great before the recession, but that was part of the problem. People overextended themselves during good times… people buying multiple houses on adjustable rate mortgages, helocs, taking cash out of their equity to spend on vacations, etc. When gas prices spiked and the job market crashed, everyone overleveraged couldn’t afford their finances anymore which had a cascading effect. The rising gas prices were the straw that broke the camels back for the masses and it caused a lot of things to tumble with it. Tbh we could see that again if gas prices explode here soon (imagine what would happen to a lot of family budgets if gas went to $10/gallon), but at the same time people are pretty well insulated financially more than they were in 08. More home equity, less adjustable rate mortgages, etc. It’s not the same precarious situation, but you never know. We didn’t really see it coming in 08 either.
It was a scary time. I was an intern with a major company at the time. There were days I came into work and multiple people above me suddenly didn’t work there anymore. Entire levels of management wiped out all at once. I was terrified about going back to school to finish my bachelors degree—taking on more student loans during a recession seemed like a bad idea. So when the end of my internship came and they invited me to stay on (I was a lot ‘cheaper’ than most of the people they let go of) I took it and instead submitted graduation paperwork for an associates degree. In the long run this worked out really well for me. I got real world experience, and had the income to support myself, and make the minimum payments on my student loans. A few years later I moved up, switched employers, and was able to both pay off student loans while finishing my bachelors using employer reimbursement.
This probably isn’t what you were asking for, but that was my experience!
Hospitality is the Canary in the coal mine, since it’s all disposable income. So being in that industry at the time, it was pretty obvious because business dried up quickly. We owned a night club and our NYE event was always sold out. The 2007/08 event was a ghost town and it never got better. After the dust settled, the recession was determined to have started in December 2007. And we saw it in real time.
You could also feel the mood in the air. It felt like a bad hangover from a very long, fun party. It really did feel like the end of an era. Which in many ways it was.
I bought my first house in 2005 and by 2008 it was negative 250k in equity. It took forever to come back to value. As long as you didnt lose your job, it wasnt too bad. Some lost out, others got great deals.
Things were reasonably priced though. I really took that for granted back then. I used to go out to eat all the time. Most things aren’t worth their prices, anymore. Kind off miss those early 2000’s, actually.
I took 20 credit semesters to graduate college a year early. As I was applying to various investment banks and what have you I was literally seeing headlines of like AIG cutting 100k jobs. Ended up adding another major and sticking around school for another year.
I was home around Christmas 08 and all the talk was who got laid off over the prior few months.
Early 09 to probably mid-2011 in hindsight really seems like the beginning of the massive increase in disparity between economic classes. Early 09 things seemed to be stable if you had a job but impossible to get back into one if you didn’t. If you had a job you were psychotic in not getting fired. Quitting without anything lined up was unheard of. So with that, if you kept your job and were contributing to a 401k and/or buying a house you are looking very good now. If you were unemployed, particularly a recent grad, you probably have not actually recovered. Another thing is that if you did get hired into a corporate role right out of college you had both high expectations and the opportunity to take on a lot as companies were lean. This was another factor in why you see such a gap with Millenials.