It is the economy.
The $700 billion bailout. Foreclosures. The plummeting stock market. As 2008 came to a close, the nation’s economic turmoil battled with the presidential election for the hearts of searchers.
- IRS Stimulus Checks
- Oil Prices
- Gold Prices
- Gas Prices
- Dow Jones
- Sallie Mae
- Stock Market
- AIG
- Foreclosures
- Debt Consolidaton
There’s still no consensus on what—or who—is to blame for the current economic crisis, but a boom in questionable mortgages and refinancing didn’t help. The domino effect that followed was quick and brutal: Over-extended institutions froze lending as foreclosures snowballed, while an economy built largely on credit skidded to a near halt. Bankruptcies, job losses, and depressed spending then sent Wall Street on a downward spiral.
But no one—including former Federal Reserve Chairman Alan Greenspan—could have predicted the far-reaching effects on the global economy.
Stimulating Rebates
In February, the Treasury Department announced it would be disbursing stimulus checks as part of its $168 billion plan to boost economic activity. Taxpayers clamored to know if the check was actually in the mail, with many “when will I get my tax rebate check” searches going out across the Web. Not to fear if you haven’t gotten one: More than 279,000 checks worth $163 million were returned as undeliverable because of out-of-date addresses.
The stimulus provided only a short burst of spending, as the cost of consumer goods —and personal debt—soared. Gas hit a record $4.11 per gallon in July in some parts of the U.S., prompting people to cut down on driving. The consequences of consumers staying close to home then hit other industries: Airlines started charging for checked bags, automotive giants were forced to ask for government aid, and “staycation” entered the Search vernacular for the first time.
A silver lining to the crumbling economy (aside from investors benefiting from gold prices)? Gas prices that continue to tumble to new lows.
Bail and Switch
On October 3, the government passed the unprecedented $700 billion rescue plan as Wall Street giants like Merrill Lynch, Lehman Brothers, and Bear Stearns imploded. Critics of the taxpayer-funded plan voiced concerns over whether free-wheeling financial institutions like AIG deserved to be bailed out—and if the plan would actually work. Nor did news of CEO golden parachutes and spa retreats help the nation’s mood, as outraged searches like “aig spa” reflected.
As it turned out, even the plan’s architects had doubts: In November, Treasury Secretary Henry Paulson announced that a key part of the plan—buying banks’ troubled mortgage assets—would be dropped.
Market Panic
The wobbly financial system hit Wall Street hard. On October 27, the Dow Jones Industrials slipped below 8,000. Even the news of a national leadership change couldn’t fight the stock market gloom; after an Election Day rally, stocks slid for two days straight. The year 2008 has produced historic lows in the Dow’s 112-year history.
The subprime mortgage crisis hit states like California, Nevada, and Florida the hardest. The city of Stockton, Calif., earned the dubious distinction of the city with the highest number of foreclosures in the country. On November 1, JPMorgan went as far as to freeze new foreclosures for 90 days, but large-scale efforts to help homeowners didn’t begin until autumn.
The ripple effect has hit all levels. The usual refuge in hard times—education—became harder to access as lending institutions like Sallie Mae tightened up on credit.
With a new president in the White House, Americans and financial leaders around the world are watching for solutions to the crisis. Now that the “change we need” is here, the question in the year to come will be whether those promises will be—or can be— delivered. The world will be waiting…and searching.