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Adjustment & adaptation

The length and depth of the recent recession and the severity of the financial crisis that preceded it made a broad rebalancing among various sectors of the macroeconomy such as housing and financial services a necessary clean-up phase.

Within the various sectors, a similar process of adjustment and adaptation was going on, much of it entailing deleveraging. Balance sheet repair occurred in four primary areas. Households focused on paying down credit card and other debt while boosting savings. Large businesses advanced in strengthening balance sheets and solidifying cash reserves. Financial institutions continued to improve their balance sheets while also adjusting to regulatory reforms and adapting their business models. Finally, governments at all levels grappled with revenue shortfalls and fiscal imbalances.

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