How Much Did The Financial Crisis Cost The US?

The St. Louis Federal Reserve estimates that the US lost $7.6 trillion of GDP growth because of the financial crisis.  Another group suggests that another $5.2 trillion would have been lost without government programs that prevented further GDP loss.  That brings the total cost of the financial crisis to $12.8 trillion.

It is difficult to determine the cost of the financial crisis but it was very costly.  The crisis in Europe was also affected by the US financial crisis.  Many of the banks were left holding toxic assets that were peddled by Wall Street banks that were taking short positions on the securities.  European exports to the US also declined because of falling demand in the US.  It is also hard to estimate the cost of lost future growth in the US, and the global economy.  Long term unemployment has eroded the value of human capital in the US, and private capital investment, as well as public investment in infrastructure, has been much less than it would have been without the financial crisis.

The economy has not been the only casualty of the financial crisis.  The financialization of the US economy during the debt driven boom also contributed to rising income inequality, and the erosion of democracy in the US.  The concentration of wealth usually leads to a concentration of political power.