Final answer:
The Great Recession of 2008-2009 led to a global recession characterized by soaring unemployment rates, financial system mismanagement, and declining consumer spending. Banks' poor lending decisions played a significant role in the economic downturn, leading to job losses and continued financial struggles for both individuals and businesses.
Step-by-step explanation:
The Great Recession of 2008-2009 had severe consequences for the global economy, including a significant increase in unemployment rates and a downturn in economic activity. During the recession, unemployment in the United States rose considerably from 5% to a peak of 10.1%, and even four years after the recession officially ended, unemployment levels remained high at 7.6%, with 11.8 million people out of work. The economic challenges were further exacerbated by declines in consumer spending and business profits leading to a reduction in stock prices, which contributed to a global recession.
The root causes of the recession were multifaceted, including the mismanagement of the financial system, particularly related to the housing market and mortgage-backed securities. Banks made bad loans, which, when coupled with falling home values, led to massive defaults and foreclosures. This financial instability rippled throughout the world, influencing international trade and leading to widespread job losses and lower incomes. The recession was fueled by both declining consumer confidence and a lack of access to credit, which drove down consumption expenditures and overall demand.
Contrary to boosting falling unemployment levels or higher job wages, the recession compelled many governments to enact bailouts of financial institutions, a move that was often criticized as prioritizing the needs of the wealthy over the wider population. The burden of the economic downturn fell heavily on ordinary citizens, many of whom faced job loss and income reduction during this period.