The Crash of 2007

Kelsie Smith

The beginning of the 2007 market crash was because of the drop in the DJIA stock index. This index had dropped over $4,000 in closing value. Soon after, the S&P 500 lost 55% of its value between October 2007 and March 2009.

Because of the drops, unemployment had risen 10%.The stock market had lost more than half of its value, and the DJIA stock continued to drop, and reached an all time low of 6,443.27.

There were quite a few contributions to the fall of the stock market in 2007, but the main cause was because of the housing industry. House prices began to rapidly increase and home loan interest rates followed soon after. A few other causes were changes in lending standards, Fannie Mae and Freddie Mac, low interest rates at the Federal Reserve, international complications, and high levels of household debt.

The Federal Reserve took action to lower interest rates, restore liquidity, and initiated a number of temporary measures to restore confidence in the credit markets.