The global financial crisis of 2008 is the most significant economic upheaval since the Great Depression that became the source of many fears and considerations of economists around the globe. High unemployment rates, low real income, changes in policymaking, increased debt levels, and universal economists’ credibility issues are just some of the problems that were provoked by the crisis and its measures. Even though efforts to stabilize the economy mostly have a negative impact on the economy, the positive effects of the matter can also be traced.
Problems of the Economy
The global financial crisis of 2008 touched every country in the world, and 2009 became the first year when global GDP contracted in real terms. The process of responding to the crisis is still negatively affecting the global economy. To deal with the consequences of the crisis almost every aspect of economic policymaking had to change. Politicians and banks are taking an increased regulating role in the financial system and monetary policy (Oxenford, 2018). Banks are offering less interest in low-risk investments slowing down the economy, as non-performing loans are still an issue for the euro-zone banking sector.
The numbers ten years after the crisis are still dreadful, as they show that the global economy has not yet recovered from the shock. The gross debt of the advanced economies is 106% compared to 72 % before the crisis (Oxenford, 2018). The advanced economy’s importance diminished from 69% to 60% (Oxenford, 2018). The unemployment rate is remaining very high in Europe, especially in Spain and Greece (Oxenford, 2018).
The numbers are putting the economic specialists under pressure, as they were unable to predict the global event or address the matter efficiently. At the same time, as economists have experienced and analyzed the crisis, such an event can be predicted and averted in the future. In short, even though the response to the global financial crisis has proven to be ineffective, lessons can be learned from it to avoid similar catastrophes.
Problems of Individual Americans
The negative consequences of measures addressing the global economic crisis can be understood more easily if translated to problems for individuals. According to Jackson (2013), Americans are making less money than before the crisis. The reason for a decrease in real incomes of American citizens is that American citizens have experienced job loss and long periods of unemployment. The statistics of 2013 show that 3.5 million Americans have been out of work for more than a year (Jackson, 2013). Therefore, people are more inclining towards choosing stable jobs instead of high-paying ones with a higher probability of becoming jobless.
Saving for retirement became harder, as fewer employers are supporting 401(k) plans and low-risk investments have diminished profit rates. During the crisis, many employers have cut their 401(k) plan matchings to stay afloat (Jackson, 2013). Moreover, conservative investments could grant up to 7 percent interest and support saving for retirement. However, such banks now offer an interest level of less than one percent on regular savings accounts (Jackson, 2013). Those two factors have made it more troublesome to save for retirement.
At the same time, it would be inappropriate to say that all the consequences of response to the global financial crisis are negative. Americans are becoming more conscious of the importance of savings, credit scores, and emergency funds. The American citizens now realize that no job is secure and they have to have multiple revenue sources to provide financial stability for the family. Moreover, people are relying less on credit cards to keep their debt down. In short, ordinary citizens have also learned the lessons of the global financial crisis.
The response to the global financial crisis has created additional barriers to economic growth. The measures have put leading economies to debt and made people around the world experience unemployment and decreases and salary. However, the measures have made economists and ordinary citizens learn from the matter and become more responsible for preventing such adverse events in the future.
Jackson, N., M. (2013) 6 Ways the 2008 Crash is Still Affecting Us. Web.
Oxenford, M. (2018). The Lasting Effects of the Financial Crisis Have Yet to Be Felt. Web.