The Year in Business: 2008

December 31, 2008 11:50:17 AM PST
ABC News' Daniel Arnall reports: 2008 has been the most important year in the lifetime of every working-age American. It is the definition of superlative. Some of the highlights and headlines that took our breath away:

Banks failed. Washington Mutual was the biggest failure ever, and 24 other (mostly smaller) banks got the FDIC treatment during the year.

A bear market settled in. Investors saw trillions of dollars disappear as global stock markets shed more than 50 percent of their peak value (S&P was down 51.9 percent Nov. 20).

Volatility became commonplace. The Dow saw its biggest one-day point gain (936.42 points Oct. 13) and point loss (777.68 Sept. 29) this year. A wild ride.

Someone made off with $50 billion. Bernie Madoff's alleged global scam bilked an unimaginable amount of money from the rich and not so rich.

Bear Stearns becomes a rug in JPMorgan's parlor after a Fed-Treasury-engineered fire sale during a springtime run on the bank.

Insurance giant AIG is nationalized. Regulators say this firm -- the bookie for hundreds of billions in credit default swaps -- was too big to fail. So taxpayers have already pushed more than $100 billion in chips onto the table.

Lehman Bros. becomes Wall Street's black sheep. The government allowed this storied investment bank to collapse, so it filed for Chapter 11 Sept. 15. That was the straw that broke Wall Street's back, sparking a global sell-off that resulted in worldwide stock losses that pretty much no one could have imagined.

Money for nothing. The Federal Reserve set its target rate for a key interest rate at 0 to .25 percent -- the lowest level in the history of the central bank. It hoped the low rates would spur borrowing and thus the economy, but banks seem unwilling to lend for fear that borrowers -- be they other banks, businesses or consumers -- will not be able to pay them back.

Bailout bonanza. By the end of the year, 204 banks had joined the Treasury's roster of bailout banks. The total amount of capital invested was $172 billion, almost exactly what the government spent on the Departments of Agriculture, Education and State during 2008.

Faster than we can print it. The Fed flooded the globe with dollars, hoping to shore up crumbling faith in the financial infrastructure. It increased its balance sheet from about $850 billion to more than $2.4 trillion in just eight months.

Your house worth less. In the past year, home prices across the nation lost value at an astonishing pace. Last year, people were desperately looking for a bottom to the market. By the end of 2008, people had stopped predicting a turnaround, resigned to another year of falling prices.

Like a derrick, up and down. In July, record oil ($145 a barrel) and gas ($4.11 a gallon) prices had people gasping. By December, a recessionary cutback in demand pushed prices to five-year lows: oil ($35) and gas ($1.61).

Price shocks. The run-up in energy prices pushed inflation into the headlines and had the Fed raising interest rates to keep things in check. Despite the fact that little time has elapsed, deflation is now a concern that's on the minds of many economists.

Pink slips like confetti. The economic slowdown is hitting American workers hard. Every month of 2008 has seen negative numbers -- so far almost 2 million jobs have been lost. And there are millions more to come as many people believe unemployment will reach 9 percent by mid-2009.

Register recession. For almost a decade, the American consumer has been the engine that's kept the economy going. With credit diminishing and fears about jobs and home values rising, the tank is empty. Retail analysts say a dismal holiday shopping season (the worst since at least 1970) will set off an avalanche of store closings and possibly push the commercial real estate market into a tailspin.

Emergency roadside service. The U.S. auto industry is completely broken. After a decade of turnaround plans, it became apparent that GM, Ford and Chrysler weren't turning fast enough. Consumers bought cars and trucks at an annual pace of about 12 million units, but the companies need 16 million units sold to remain solvent. By year's end, the Big Three were begging Congress and the administration for a bailout and still can't guarantee that the industrial engine will be jump-started.

Stock Market Losses. Click to see a chart for a look at some key numbers for 2008.


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