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The impact of the financial crisis of 2007 on the USA economy

Prepared By Team 1

Macroeconomic Variable's • GDP • • • Unemployment Inflation Exports and Imports .

GDP  Government Revenue & Expenditure  Real Estate Industry  The Loss of Investors Confidence  Consumers Cut Spending .

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5%x+1.70% 2.GDP R Square 39% Standard Error Before the crisis Effect of the crisis P-value Mean Equation 0.20% -2.2%-2.15% y=3.7% .01740197 3.50% 6.

Unemployment  Unemployment & Crime association  Effect on Oil Prices  Shifting Job Risk .

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Unemployment R Square Before the crisis Standard Error Effect of the crisis p-value Mean equation 40% 5% 0.015876006 2% 3.50% 6.37% y= 5%+2%X+1.5% .

S pursuing GDP targeting strategy  No Guarantee for long-term stability .Inflation  Least affected of Macroeconomic variables  U.

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3%+1.Inflation R Square Standard Error Before the crisis Effect of the crisis p-value Mean Equation 25% 0.01239097 2.6%-0.50% y= 2.2% .30% 64% 2.60% -0.

Government Efforts  Increase Government Spending  Banks withdrew reserves to increase liquidity  Tax Cuts .

17. 2009 US President signed into law a $787-billion stimulus package:  Providing $288 billion in tax cuts and benefits for millions of working families and businesses  Increasing federal funds for entitlement programs. by $224 billion  Making $275 billion available for federal contracts.Government Stimulus Package  On Tuesday Feb. grants and loans . such as extending unemployment benefits.

The federal reserve action  influence the demand of goods and services. . by adjusting the short-term funds rate.  Make it possible for any financial institution that requires liquidity to access credit directly from the Fed  increased credit facilities.  instituting measures that increase harmony in the banking sector.

which increased to over $2 trillion in 2010.Results of the federal reserve action  Positive results:  1-reducing the funds rate.  2-have eased credit crisis. fell to 0% at the end of 2008.25% in 2007. which stood at 4. .  3-Fed’s credit facilities has realize increases in its balance sheet.

Results of the federal reserve action  Negative:  banks didn't lend out the money they borrowed from the fed but invest it in profitable areas such as government bonds which decreased liquidity even further and made the continuation for the reduction in consumption even worse. .

Conclusion  financial crisis caused by greed and irresponsibility  The decrease in the price of oil affect economies of countries that depend on it  the crisis was very wide and it affected not only USA but the entire world effected due to the influence of us economy .

End  Questions or comments ? .