How is the 2008 crisis still affecting the market and you?
The 2008 global financial crisis was one of the most severe economic upheavals in world history. The turmoil impacted countries around the world. It has been more than a decade since the stock market crisis struck, but its repercussions are still felt. Let us see how this financial instability continues to affect the market and you till today:
Know how the 2008 crisis continues to affect the market
The country’s Gross Domestic Product or GDP measures the size and health of its economy. It is the total value of goods and services produced over a specific time. When GDP goes up, the economy is generally thought to be doing well. A weak growth signals that the economy is doing poorly. According to the Bank of England, UK GDP fell by 6% following the global financial crisis. Its impact on people’s lives was severe, with considerable falls in wages, restricted access to credit, and many people losing their jobs.
The household income declined over the decade, and it has had long-term effects on individuals. With a decline in disposable income, the expenses declined, and investment saw a fall.
The 2008 stock market crash had a noticeable impact on corporate profits, falling sharply because the economy reverse. It took years for the profits to recover, but it left a lasting impact, and they are still well below the long-term gains that we have seen in the past. A decline in corporate profits directly impacts the stock price and the dividends paid by the company. This has led to a decrease in the income of investors.
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As mentioned, the stock prices saw a significant decline in the past, leading to record-making losses. The market gains posted since the crisis have been average and continue to be so. It is nothing compared to the market gains that were published in the early 2000s. This has led to a decline in investment and investor’s income.
There is a massive inequality of income realised over the past decade. This disparity in the income between the poor and rich households has been widening since the crisis. It has also accelerated the pace of income inequality. The top 5% saw a massive rise in their income, while the bottom 20% saw an unimaginable decline. This disparity remains and continues to affect a major part of the population.
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The 2008 stock market crash has impacted all of us massively, especially our finances. It continues to affect us, and the current pandemic has a lot of significance to the crisis of 2008. There is a lot of uncertainty, recession, and inequality of income that persists, impacting our lives and economic conditions.
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