Financial crisis and recession
The financial crisis that hit the United States and eventually the rest of the world in 2008 and 2009 began in the US housing market and led equally into major financial institutions that had contributed to indefensible borrowing. Faced with the choice between allowing the institutions to agree or intervene, the central bank and political authorities chose to step in with huge sums.
The crisis led to a decline in the economy and a sharp rise in unemployment. Retirees scrapped their savings, and many Americans had to sell their homes.
From 2009, the economy began to grow again and unemployment fell, but the difficulties in the economy characterized the United States for many years. In 2014, the proportion of unemployed was back at the pre-crisis level, but probably the numbers concealed many who had given up on obtaining work. The crisis had also brought with it large public costs and increased foreign debt, and it contributed to strong dissatisfaction with the country’s political leaders. For information about North America, please visit areacodesexplorer.
Economic disparities continued to grow, as they had done since around 1980. An increasing share of total revenues went to corporate owners and a declining share to employees.
Real wage growth among the bottom 80 percent of the income ladder was a total of 16 percent in the period 1979–2011, while it was 56 percent for the top five. For the top percent, the increase was 174 percent, including a large share of capital income. The differences in wealth were greater.
The growing inequality became more prominent as a theme in national politics after the financial crisis, on the left with actions such as “Occupy Wall Street” as well as in more traditional political debate. Towards the end of Obama’s presidential term, the frustration of people who perceived themselves as middle class, with the desire to move upward both economically and socially, was large enough that the topic made a stronger impact on public conversation than before. What the problem consisted of and what solutions were suitable continued to receive different answers on the right and left sides. The theme was among the foremost in the 2016 presidential race, including in the two parties’ nomination processes.
US dependence on imported oil had been a political problem since the oil crisis in 1973-74, with vulnerability to price increases and other states’ ability to restrict oil supply. The price of gasoline for American consumers more than doubled from 2002 to 2012. This affected many car-dependent families in the crisis years after 2008. In an environmental perspective, the price increase may have played a positive role with stronger awareness of fuel consumption and stricter emissions requirements for new cars.
Carbon emissions in the United States stagnated in 2007 and gradually declined during and after the recession in 2008-2009. The main reason was the transition from coal-fired power generation to the use of cheaper natural gas. During these years, a sharp rise in domestic natural gas and oil production began in the United States, primarily from oil shale. The result was a significantly reduced dependence on foreign production.
Polarized party politics
Despite the excitement over the 2008 election, with between 1.2 and 1.8 million people present at his accession in Washington, DC, the shift in power also ushered in a period of intensified political polarization. In the Republican Party, many feared a left shift of policy, and grassroots showed that Obama’s skin color and family background from Kenya gave rise to conspiracy theories and mistrust.
In the first two years, with a Democratic majority in both chambers of Congress, Obama got through several important issues. The largest reform was the health reform in 2010, but also laws on conditions for equal pay, regulation of the financial industry and a large package of measures for the economy were adopted during this period.
From 2010, Republicans took over the majority in the House of Representatives, partly after strong mobilization in what was named the Tea Party movement of 2009.
Measured in the number of resolutions in Congress, the ability to agree across party divisions declined sharply after 2010, also compared to previous periods when the president and congressional majority came from different parties. On several occasions, the country was in danger of having to shut down the state administration because Congress failed to agree on the appropriations – in the fall of 2013 such a “shutdown” became a reality for 17 days.
The locked-in political situation prevented the United States from solving major societal problems. The large budget deficits required both restructuring of the tax system and structural changes in pension and welfare benefits in order to be covered. In immigration policy, clarification was expected of the handling of twelve million people without papers, but of great importance for both the economy and the social life. Climate policy was just as inflamed, with no prospect of cross-political compromise nationally. In some cases, the states solved the problem, with associated restrictions in reach, but for the United States as a community the redeeming moment was waiting.