Fiscal Policy Usa

Topics: United States, Monetary policy, Democratic Party Pages: 4 (1362 words) Published: February 3, 2013
Jobless Claims in U.S. Drop to Three-Year Low


The United States entered into recession in December 2007 when job losses began. The financial crisis is linked to reckless lending practices by financial institutions and the growing trend of securitization of real estate mortgages in the United States. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world. A more broad based credit boom fed a global speculative bubble in real estate and equities, which served to reinforce the risky lending practices. The doubtful financial situation was made more difficult by a sharp increase in oil and food prices. The emergence of Sub-prime loan losses in 2007 began the crisis and exposed other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. As share and housing prices declined, many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance. (, [31 Dec 2011])

Due to the sharp downward turn in September 2008 has affected the U.S. economy. The U.S. economy has now lost 4.4 million jobs since the start of 2008. The survey of households found 12.5 million people are now unemployed, the most since records started being kept in 1940.The U.S. economy continued to drain jobs in February, bringing total job losses over the last six months to more than 3.3 million, and taking the unemployment rate to its highest level in 25 years. The government reported that employers slashed 651,000 jobs in February 2009, down from a revised loss of 655,000 jobs in January 2009. By December 2010, the official U.S. unemployment rate had increased to 9.8%. Even at the peak of the recession, the...
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