Caused by subprime mortgage crisis, where loans are given with low initial interest rates that later increased significantly. This leads to many homeowners unable to meet mortgage obligations, causing a surge of foreclosures which cause downturn in housing market. Globalization of finance as a result of interbank lending made the failure of the US markets jeopardize the state of global economy as well.

Numbers

• Unemployment rate in the US:
  • Pre-crisis (2007): 4.7%
  • Peak during crisis (2009): 10.0%
  • Post-crisis (2012): 7.8%
• GDP growth rate:
  • Pre-crisis (2007): 2.1%
  • Peak during crisis (2009): -2.8%
  • Post-crisis (2012): 2.8%