The Federal Reserve Bank of San Francisco said that the country has still not fully recovered from the 2008 crash, and the size of the resulting losses suggests that the level of output is unlikely to revert to its pre-crisis trend level, which  means that Americans will make, on average, $70,000 less over the course of their lifetimes. 

The Fed noted that the size of the U.S. economy is well below the level one would expect given growth rates and other economic trends that had prevailed during the pre-crisis era, indicating that the crash left behind a large and persistent loss in output. The report pointed to revisions of economic estimates from the Congressional Budget Office showing that actual U.S. gross domestic product (GDP) is about 12 percent below what it likely would have been, given the aforementioned trends, had there not been a crash. It noted that, when the economy is doing well, an adverse financial shock such as the crisis is likely to restrain opportunities because firms are less able to finance potentially profitable opportunities. Meanwhile, when the economy is already struggling, such as in the wake of the crisis, favorable financial conditions may not necessarily stimulate new economic activity if there are no new investment opportunities. 

"Consistent with theory, we find that an easing of financial conditions has little effect on economic activity. However, an adverse financial shock has large effects on economic activity. Because such losses are very persistent, they can have dramatic effects on societal welfare and important implications for policy," said the San Francisco Fed. 

In order to explore this effect on the U.S. economy since the crisis, the Fed looked at "excess bond premium," which has been previously proposed as a measure of the risk-bearing capacity of the financial sector and, therefore, its willingness to extend credit. Using history as a guide, the Fed then developed a model that it says captures how financial conditions and GDP typically interact over the business cycle. Since the United States has had many episodes of mild financial market disruptions, the model can use those episodes to calculate how changes in later financing conditions affect the GDP as a whole. Based on this, the model is then used to assess how much the size of the gap between current GDP and its pre-crisis trend levels can be attributed to the financial crisis, effectively calculating how GDP would have fared without the 2007-2008 market disruptions. 

Without a major financial stress, excess bond premium increases only slightly, driven by more typical deterioration of economic conditions. 

"Without the large adverse financial shocks experienced in 2007 and 2008, the behavior of GDP would have been very different. It would most likely resemble the less severe 1991 recession, with GDP declining by only 1.5% and reverting to close to its pre-crisis trend level in a few years. This behavior is in stark contrast to actual GDP, which has not reverted to its pre-crisis trend level," said the Fed. 

A more mild recession would have set the gap between output and potential output to be only 5 percent versus the 12 percent the CBO reported. The Fed's model says that this means that the 2007-2008 crisis persistently lowered output by roughly 7 percent, which it said, in dollar terms, represents a lifetime income loss in present-discounted value terms of about $70,000 for every American. This simple calculation takes the reading of GDP per person in 2007 (approximately $50,000) and assumes an annual discount rate of 5 percent. 

Previous Federal Reserve research has found that those born in the 1980s were particularly hard hit by the crisis, as it happened during what's seen as the prime earning years within their lifetime. Overall, it would seem that even 10 years later, we are all still living in the shadow of the financial crisis.