It’s been 10 years since the collapse of Lehman Brothers triggered a chain reaction that produced a major recession.
In 2008 after decades of steady upward growth in the economy and asset prices, America suddenly faced the worst financial crisis in 70 years.
Starting in October of 2007 the S&P 500 dropped 56% over 516 days, bottoming out in March of 2009. It then took 1,011 days, until March 2013 to bounce back to pre-recession levels. In October and November of 2008 the federal government implemented the Troubled Asset Relief Program to reduce the chance of bank failures, and started Quantitative Easing to encourage investment.
Since March 2013, the S&P 500 has grown 80% or 11.5% per year on average. If you include dividends, that increases to 106% or 14.3% per year.
In a new report, Betterment examines how the 2008 financial crisis is still relevant to consumers today, affecting everything from their attitudes toward finances and the financial industry to their hopes for a secure financial future.
Regardless of age, income and gender, the research finds that the scars of 2008 are still very raw for millions of people today.
Ten years after the crisis, most consumers remain deeply distrustful of Wall Street and are still working to recover financially. But there’s hope in the youth: despite graduating into one of the toughest job markets in decades and seeing the real-time effects of the crisis, as well as being first-time or new voters amid controversial government involvement in bank bailouts, younger generations are the most trusting of and optimistic about Wall Street’s future.
While the effects of the financial crisis went far beyond investment account balances, the data reinforces the power of staying the course. Roughly half of survey participants were already investing in 2008, and nearly all of them lost money as a result. Yet, those who saw those effects on their portfolio and still rode out the storm are more than twice as likely to report feeling like they’ve fully recovered, and are investing and saving more than their non-investing counterparts.
The full report details these themes and other takeaways for survey respondents. Download and read Betterment’s Consumer Financial Perspectives Report for the full story.
• An online survey was conducted with a panel of potential respondents. The recruitment period was July 31 to August 6, 2018.
• A total of 2,000 respondents 18 years and older, living in the United States completed the survey. Of these respondents, 1,602 were at least 18 years old in 2008.
• The sample was provided by Market Cube, a research panel company. Panel respondents were invited to take the survey via an email invitation and were incentivized to participate via the panel’s established points program.