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THE ECONOMIC FALLOUT 

all job seekers, according to the most recent government statistics, searched for work
for at least  weeks.
The labor market is daunting across the board, but it is especially grim among
African American workers, whose jobless rate is ., about  percentage points
above the national average; workers between the ages of  and  years old, at
.; and Hispanics, at .. And the impact has been especially severe in certain
professions: unemployment in construction, for instance, climbed to an average of
. in , and averaged . during the first  months of .
Real gross domestic product, the nation’s measure of economic output adjusted
for inflation, fell at an annual rate of  in the third quarter of  and . in the
fourth quarter. After falling again in the first half of  and then modestly growing
in the second half, average GDP for the year was . lower than in , the biggest
drop since .
Looking at the labor market, Edward Lazear, chairman of President George W.
Bush’s Council of Economic Advisers during the crisis, told the Commission that the
financial crisis was linked with today’s economic problems: “I think most of it had to
do with investment. . . . Panic in financial markets and tightness in financial markets
that persisted through  prevented firms from investing in the way that they oth-
erwise would, and I think that slows the rehiring of workers and still continues to be
a problem in labor markets.” 
In June , the nation officially emerged out of the recession that had begun 
months earlier. The good news still had not reached many of the . million Ameri-
cans who were out of work, who could not find full-time work, or who had stopped
looking for work as of November . Jeannie McDermott of Bakersfield told the
FCIC she started a business refilling printer ink cartridges, but in a tight economy,
she didn’t earn enough to make a living. She said she had been searching for a full-
time job since . 
Households suffered the impact of the financial crisis not only in the job market
but also in their net worth and their access to credit. Of the  trillion lost from
 to the first quarter of  in household net wealth—the difference between
what households own and what they owe—about . trillion was due to declining
house prices, with much of the remainder due to the declining value of financial as-
sets. As a point of reference, GDP in  was . trillion. And, as a separate point,
the amount of wealth lost in the dot-com crash early in the decade was . trillion,
with far fewer repercussions for the economy as a whole. The painful drop in real es-
tate and financial asset values followed a . trillion run-up in household debt from
 to . Aided by the gains in home prices and, to a lesser degree, stock prices,
households’ net wealth had reached a peak of  trillion in the second quarter of
. The collapse of the housing and stock markets erased much of the gains from
the run-up—while household debt remained near historic highs, exceeding even the
levels of . As of the third quarter of , despite firmer stock and housing prices
and a decline in household borrowing, household net worth totaled . trillion, a
. drop-off from its pinnacle just three years earlier (see figure .).
Nationwide, home prices dropped  from their peak in  to their low point