New Report Finds Financial Crisis Cost Economy $12.8 Trillion

http://thinkprogress.org/economy/2012/09/13/846281/financial-crisis-lost-trillions/

The U.S. is still struggling to claw out of the hole created by the Great Recession, the Wall Street-caused crisis that resulted in the loss of millions of jobs. According to a new report from Better Markets, a pro-financial reform organization, the crisis cost Americans about $12.8 trillion in lost economic output:

– Estimated actual gross domestic product (“GDP”) loss from 2008 to 2018, of $7.6 trillion. This is the cumulative difference between potential GDP — what GDP would have been but for the financial and economic crises– and actual and forecast GDP during the period.

– Estimated avoided GDP loss from 2008 to 2012 of $5.2 trillion. This figure is the estimated additional amount of GDP loss that was prevented only by extraordinary fiscal and monetary policy actions. It is derived from the model-based estimate of Alan Blinder and Mark Zandi of $6.9 trillion, less $1.7 trillion in adjustments. (Because the Blinder/Zandi simulation ends in 2012, it does not include any avoided losses for the 2013-2018 period. For example, the effects of any ongoing or additional crisis-related monetary policy—such as Federal Reserve purchases of agency mortgage-backed securities—will continue past 2012.)