Financial crisis of 2008 is still taking a bite out of your paycheck 10 years later

Some 10 years after the global finance system nearly collapsed under the weight of reckless mortgage lending, the U.S. economy is still feeling the impact. And the reverberations will continue for some time.

Over the long term, the financial damage from the 2008 meltdown will cost every American roughly $70,000 during their lifetime, according to research published in August by the San Francisco Federal Reserve.

The reason, the researchers say, is that the collapse of the global credit system a decade ago has permanently depressed the nation's gross domestic product by about 7 percentage points.

"This is a large number," San Francisco Fed economist Regis Barnichon and his co-authors wrote. "Without the large adverse financial shocks experienced in 2007 and 2008, the behavior of GDP would have been very different."

The result is that the capacity of the U.S. economy is smaller today that it would have been if the 2008 meltdown had never happened. That dampening effect can be seen in the annual economic forecasts that followed the financial crisis, as the long-term damage took effect. One widely watched annual forecast from the Congressional Budget Office, for example, has been steadily downgraded for most of the last decade.

That's just one way to measure the impact of the Great Recession which ended in 2009. To see how the latest cycle compares with past downturns, CNBC looked at a variety of economic measures over the last seven economic cycles since 1960. We tracked the data from the peak of one boom, through the ensuing recession, to the end of the next peak.


Despite the recent uptick in strength, the pace of growth in gross domestic product in the current cycle has lagged every economic recovery since the 1960s. From the beginning of the Great Recession to the present, the economy has grown by about 17 percent, after adjusting for inflation. That's far less than the economic expansions that ended in 2001, 1990 and 1969.


Gross domestic product is just an accounting of the nation's output and income, including households, corporations and other businesses. The dampening effect of the financial crisis of 2008 also depressed American households' income over the course of the last decade. In real terms, disposable personal income is up about 23 percent so far in the latest economic cycle.

Homeowner wealth

For American homeowners, the biggest hit from the 2008 meltdown came from the steep drop in home prices, which wiped out trillions of dollars in home equity before the housing market began recovering in 2011. It would take another three years to recover the overall losses in home equity, but millions of Americans whose homes were seized in foreclosure have yet to make up their losses. Overall, the gains in home equity still lag every other economic cycle in the last half century — with the exception of the cycle that ended in 2007 as housing prices were crashing.

Corporate profits

Corporate profits also cratered in 2008, falling sharply as the economy slammed into reverse. Though profits have recovered in recent years, they are still well below the long-term gains seen in three of the last seven cycles, based on inflation adjusted data for S&P 500 earnings provided by Yale economist Robert Shiller.

Stock prices

Much of the attention on stock prices lately has focused on the records being set by market indexes. A decade ago, that focus was on record-making losses. As a result, the overall market gain posted since the 2008 crisis has been about average for past economic cycles, based on Shiller's inflation-adjusted data. It's been far less than the runaway market that produced the dot-com bubble of 2000 that helped bring the 1990s economic expansion to an end.

Unequal gains

The gains in wealth and income over the past decade haven't been distributed evenly. The disparity in the growth of household income between rich and poor households had already been widening well before the 2008 crisis. But the financial upheaval accelerated the pace of income inequality.

For those in the top 5 percent, incomes recovered quickly and have since grown at the fastest pace. Those in the bottom 20 percent, by contrast, saw their incomes fall, in real terms, and had barely recovered that lost ground by 2016. (That's the latest census data available on income distribution.)

Job gains by sector

Personal financial recovery from the 2008 meltdown also depends on what each worker does for a living. Some sectors have seen strong job growth, for example, while others have lagged behind.

Employment levels for the education and health-care sectors, for example, are up by more than 28 percent. The construction, information and manufacturing sectors, on the other hand, are still below employment levels seen in September 2008, according to the latest BLS data.

Weak wages

Wage growth has also been extremely uneven from one part of the country to another. And while wages are generally higher in urban areas and on the East and West coasts, the growth of wages has been scattered through the country, according to the latest census county level data. Here's how job and wage growth in your county compares with the national averages.