How Much Did the Financial Crisis Cost?

Share:

May 31, 2012

There’s little in the way of  comprehensive bean-counting when it comes to the financial crisis. That’s in part because it’s still unfolding.

But also because much of the human fallout can’t really be monetized. For example, the Treasury Department, in an April assessment [PDF], put the total lost household wealth at $19.2 trillion. But that doesn’t take into account long-term effects of homeowners who may be less socially mobile — and therefore contribute less to the economy over time.

Better Markets, a nonprofit watchdog for financial regulatory reform, recently attempted to analyze the full cost of the financial crisis, pulling together government data and outside studies. The group admits its own estimate [PDF] isn’t complete, either, but it lays out five major indicators to try to offer a more comprehensive accounting of the crisis:

  1. Gross Domestic Product: The report notes the massive difference between the actual and potential GDP — now estimated at about $2.6 trillion, according to a January Congressional Budget Office report.
  2. Unemployment: The rate peaked at 10.1 percent in October 2009, but it’s still at 8.1 percent today. That’s 12.5 million people who are out of work, not saving for retirement and not contributing to the GDP.
  3. Government bailouts: The government has poured about $23 trillion into a host of programs and bailouts.
  4. Lost household wealth: With home prices tanking, the report estimates a loss of $7 trillion in the real estate industry. The stock market decline has brought another $11 trillion in losses, and retirement accounts have lost $3.4 trillion.
  5. Human suffering: It’s hard to put a dollar value on this. But the report found plenty of grim data to offer some insight: The Census Bureau’s 2010 estimate of 46.2 million people in poverty is the “largest number in the 52 years for which poverty estimates have been published.”

You can read more detailed analysis of the factors in the full report [PDF]. And if you’re still wondering how it all went wrong, check out our four-part series, Money, Power and Wall Street.


Sarah Childress

Sarah Childress, Series Senior Editor & Director of Local Projects, FRONTLINE

Twitter:

@sarah_childress

In order to foster a civil and literate discussion that respects all participants, FRONTLINE has the following guidelines for commentary. By submitting comments here, you are consenting to these rules:

Readers' comments that include profanity, obscenity, personal attacks, harassment, or are defamatory, sexist, racist, violate a third party's right to privacy, or are otherwise inappropriate, will be removed. Entries that are unsigned or are "signed" by someone other than the actual author will be removed. We reserve the right to not post comments that are more than 400 words. We will take steps to block users who repeatedly violate our commenting rules, terms of use, or privacy policies. You are fully responsible for your comments.

blog comments powered by Disqus

More Stories

U.S. Strikes Iran-Backed Militias in Syria, Responding to Rocket Attacks
The U.S. strikes destroyed facilities used by a number of Iranian-backed militias, including Kata’ib Sayyid al-Shuhada and Kata’ib Hezbollah. The latter figured heavily in our recent documentary "Iraq's Assassins."
February 26, 2021
Saudi Crown Prince Approved Plan to "Capture or Kill" Columnist Jamal Khashoggi, According to Declassified U.S. Report
The newly declassified U.S. intelligence report names Mohammed bin Salman, subject of the 2019 documentary "The Crown Prince of Saudi Arabia."
February 26, 2021
As the U.S. Crosses 500,000 Deaths from COVID-19, These 9 Documentaries Offer Context
These nine FRONTLINE films help explain how we reached this point.
February 22, 2021
As the U.S. Rejoins the Paris Climate Agreement, Revisit FRONTLINE’s Recent Climate Reporting
These five projects illuminate the science, politics and impacts of climate change.
February 19, 2021