The Financial Crisis Cost More Than $14 Trillion: Dallas Fed Study
The financial crisis likely cost at least a year’s worth of U.S. economic output, a new Fed study finds. Worse, it’s hurting the economy even now and will hurt it for years to come.
That is the cheerful conclusion of a new study by economists at the Dallas Federal Reserve, entitled “How Bad Was It? The Costs and Consequences of the 2007–09 Financial Crisis.”
So how bad was it? Really, really bad: The economists say a “conservative” estimate of the damage is $14 trillion, or roughly one year’s U.S. gross domestic product. This is based on how much output was lost during the crisis and Great Recession, along with all the damage done to potential future economic growth.
This is a factoid worth keeping in mind the next time bank lobbyists and flaks warn, as they habitually do, that new rules and regulations could slow the U.S. economy. Will rules to safeguard the economy vaporize $14 trillion in GDP? No? Then they’re probably worth doing.