The Great Recession is a term for the United States' economic contraction in 2007-2009, as well as for the somewhat slower economy that followed in the years afterwards. I do not remember when I first heard the term "Great Recession", but it was probably sometime in 2010. At first, the term was somewhat of a joke, but it has now entered normal usage in journalism and financial discussions.
The joke behind "Great Recession" is that a recession, is by definition, less severe than a depression. There is not a single agreed upon definition between recession and depression (although one joke has it "a recession is when your neighbor loses their job, a depression is when you lose your job"), but in general, when a recession reaches a certain magnitude, it becomes a depression. However, the "Great Recession" was a strange mixture, having more widespread social and economic effects than most recessions, but without the dire effects of a depression.
Beginning in 2007, after six years of economic growth, there was an asset bubble in housing, aggravated by dealing in exotic financial vehicles such as tranched mortgages and credit default swaps. Probably at some point the economy would have corrected for a bubble (as it always does), but the correction was much more rapid and dramatic than expected. The economy quickly contracted, and in two years, the unemployment rate went from 4.4% to 10%. This was one of the factors of the election of Barack Obama as president, and in the early days of his administration, fiscal stimulus helped stimulate the economy. At the same time, the Federal Reserve Bank cut interest rates to basically zero. And from an economic standpoint, this worked: unemployment peaked at 10% in October 2009 and then started falling. 10% is the second highest unemployment rate of the post-World War II period, but is still much lower than the 25% rate at the height of the Great Depression. On paper, the economy begin to expand shortly after the peak of the financial crisis. 2010 saw the economy return to pre-recession levels of GDP, and it has grown every year since then (despite one or two quarterly dips). Unemployment continued to fall steadily, reaching a level of "full economic employment" sometimes in 2014.
On paper, this looks like a brief financial crisis followed by a normal recovery. Where did the "great" part come from?
As someone who finished graduate school in June of 2009, I would say that the hallmark of the Great Recession was the slowness of opportunities to happen. There was (in my experience at least), no miles of abandoned storefronts, no shortage of basic necessities, but just a type of stagnation, especially for those entering the economy. Young people who would have once became automatically middle class lived in a type of limbo where they didn't have the opportunities to fully enter the economy. I was one of the stereotypes, a boomerang kid with a graduate degree who was living in my mother's house, and, while comfortable, not living up to my full potential, personally or economically.
This is my perspective on the "Great Recession", although it comes from a young, educated person living in a part of the country that was growing economically and in population. The stories of people in other areas of the country during this time would be much different. But in general, I think that the Great Recession was marked by having sufficient basic necessities, while having a lack of long term opportunities. There were many other economic and social effects of the Great Recession, including:
- Inflation in housing, health care and education.
- Deflation or stagnation of prices in food, clothing and most consumer goods.
- A great fall in the price of electronics, especially smartphones.
- An increase in the importance of certain economic sectors, especially technology and medicine.
- A decrease in the amount of manufacturing jobs.
- Related to the two above, an inflationary economy in centers of technology, such as California, while a simultaneous deflationary economy in Eastern manufacturing states, such as Ohio.
- An educational "arms race" where young people sought out sometimes superfluous degrees and certifications to differentiate themselves in a crowded job market.
- Development of new fossil fuel resources in the United States through fracking, that led to a generally low price of fossil fuels, although not low by historical terms.
- The movement of young people into urban areas for both economic and lifestyle reasons, marking a change from the general suburbanization of the post-World War II period.
- Towards the end, a development of online retail, displacing the traditional retail sector.
Some of these changes would have probably happened with or without the bank crisis that triggered the Great Recession, and some of these are long term processes that are probably just beginning. I think that the true scope of the Great Recession is greater than just the economic downturn of 2007-2009, and that we are just beginning to see some of the long term social and economic changes that the Great Recession signaled.