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The 2020-2021 financial crisis due to COVID-19 significantly differed from the 2009 Great Recession. First, the causes and nature of the crises were different. In 2009, the economy imploded and partially collapsed due to the financial system, a range of poor oversight and negative decisions led to the crisis. Meanwhile, in 2020, the constraint is the pandemic, not internal systems. The pandemic is global and cannot be how controlled by the government. The financial system has been incredibly strong since the pandemic began, with the ability to lend allowing the economy to continue functioning, albeit seeing some drops. The constraint in 2009 was the financial system and predatory behavior of key players and banks which then resulted in them not being able to reliably operate. The population also was severely mistrusting the banks, and many lacked the resources for spending to upkeep the economy. Meanwhile, in 2020, the reason is a medical and social one. Governments have to focus on reopening the local economies while maintaining safe levels of COVID infections, and encouraging vaccinations to reach pre-pandemic employment levels (Bosco).
There are some similarities in the crises. Due to the economic downturn in both, companies and manufacturing were forced to cut down operations and jobs, although, in 2020, some industries need workers more than ever before. The functioning of the economy in 2020 is struggling in particular due to a global supply chain crisis, while in 2009, there were fiscal issues. In both instances, governments sought to support the economy. In 2009 this was mostly by bailing out large firms and attempting to stabilize the financial system, while also passing oversight regulations. In 2020, the government is taking even more extreme measures, however, this time aimed more at the general economy and supporting households, including payouts, child tax credits, and other benefits for regular people, small businesses, and structurally critical elements of the economy. This has allowed it to so far keep the economy afloat but at the cost of inflation.
Work Cited
Bosco, Dean. 2008 vs. 2020: A Financial Crisis Comparison. CLA, 2020, Web.
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