Well, it's all over. A year after the global economy went into freefall, we're out of the deepest recession since the Great Depression — if you believe some of the experts.

Store closing signs are posted at a furniture store in San Jose, Calif. (Paul Sakuma/Associated Press) The International Monetary Fund declared the recession over on Aug. 19, 2009, but warned the recovery would be sluggish. The agency also predicted that higher taxes would be needed to help pay for all that government spending that was designed to stimulate the economy.

A month earlier, the Bank of Canada was also ready to write the recession's epitaph. It, too, warned that recovery would be slow and that the unemployment rate would likely go higher before it started declining. The bank also said a rising Canadian dollar was putting a damper on the economy.

Maybe not quite rosy projections, but they're a far cry from what was happening as the summer of 2008 faded into fall. On Sept. 29, 2008, the TSX plunged by 840.93 points — or almost seven per cent — in its biggest one-day fall ever, after the U.S. House of Representatives defeated a bailout bill and the price of oil fell below $100 a barrel.

The TSX had already shed about 4,000 points from its high of just over 15,000 earlier in the year. It would lose close to another 4,000 points before starting to climb again.

The U.S. bailout bill was designed to breathe life into a financial system on life support.

Here's a look at how some sectors and players were doing back then — and how they're faring now.

U.S. housing market

Then: Almost three years ago — on Sept. 25, 2006 — the U.S. National Association of Realtors reported that for the first time in 11 years, the median price of a resale home had dropped. Sales of homes fell in August 2006 for the fifth month in a row.

A house under foreclosure is shown in an Oakland, Calif., neighbourhood Feb. 20, 2009. (Paul Sakuma/Associated Press)Rapidly rising U.S. home prices were credited with fuelling an unprecedented growth in the American economy, as homeowners used the equity in their homes to keep on spending.

Richard Fisher, president of the Federal Reserve Bank of Dallas, called the slowdown in the housing sector a "serious correction," but said the U.S. economy was otherwise healthy.

"The market for residential real estate had to adjust and it is now doing so."

"Adjust" may have been an understatement. Within a year, home prices had fallen 30 per cent or more in some markets. Homeowners were left with houses that were worth less than their mortgages.

The financial institutions that held those mortgages began to worry.

Now: The market is beginning to show some signs of life. The number of new homes under construction hit an all-time low in April 2009, but then started a modest upward trend. Prices have stopped falling. And the industry has seen a temporary demand increase from consumers who want to take advantage of a new federal tax credit for first-time homebuyers. It covers 10 per cent of a home price up to $8,000. That credit is set to expire at the end of November.

Freddie Mac and Fannie Mae

Then: In the lead-up to the 2008 financial crisis, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) together owned or guaranteed half the mortgages in the United States — about $5 trillion US worth.

Both were private companies funded by cash raised on the stock markets through securities backed by mortgages. Fannie Mae began as an arm of the government in 1938, to help Americans buy homes during the Great Depression.

After the real estate bubble burst, millions of mortgage holders began defaulting on their mortgages, eroding the value of mortgage-backed securities and putting an incredible strain on the two companies' cash flow.

They lost $14 billion US in the year leading up to September 2008 paying-out guarantees on millions of bad loans. The two companies were teetering on the verge of bankruptcy. If they went under, it would be difficult for Americans to secure new mortgages and investors — including foreign central banks, financial institutions and pension funds — around the world would lose a lot of money.

Now: The U.S. government nationalized the two companies, committing $100 billion to back the loans of each firm. They remain under government "conservatorship" as they restructure. The U.S. government may hold onto the companies — but they are expected to reduce their holdings.

Financial institutions

Then: The earthquake that hit Fannie Mae and Freddie Mac helped spawn a financial tsunami for a string of banks and investment houses around the world. It took out the investment houses Lehman Brothers and Merrill Lynch - both unable to recover from a mountain of bad debt and soured real estate holdings.

AIG chief executive Edward Liddy takes the heat for big retention bonuses. He agreed to take over as CEO for an annual salary of $1. (Susan Walsh/Associated Press)Big American banks like Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Goldman Sachs, AIG and Morgan Stanley received more than $200 billion in bailout loans from the U.S. government.

AIG got into trouble insuring mortgage-backed securities and other risky debt. Without the bailout money, AIG would have defaulted on its obligations, and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they held.

"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law.

A major part of the problem was sub-prime mortgages — banks approving large mortgages to people who could not afford them. Sometimes, the banks would lend more than the value of the house. When the housing bubble burst, people were stuck with mortgages they couldn't possibly pay off even if they sold their houses.

Now: Lehman Brothers is no more. Merrill Lynch is owned by Bank of America. Some institutions — including J.P. Morgan, Goldman Sachs and Morgan Stanley — have repaid their bailout money. Others have said they'll soon be in a position to make at least partial repayments.

European financial institutions

Then: Take a trip back in time — say, 10 years ago. Who would've cared about Iceland's banking system, except for the 320,000 people who live there? And who would've given a second thought to the fortunes of the Royal Bank of Scotland?

Former Royal Bank of Scotland CEO Fred Goodwin took a £700,000 ($1.2 million Cdn) per year pension from the bank a month before it posted a £24.1-billion ($43 billion Cdn) loss. (Danny Lawson/Associated Press)That changed last year. Over the past few years, Iceland made moves to become an international banking centre — and things were going pretty well until things unravelled in 2008. Iceland's banking assets amounted to about nine times its gross domestic product and its current account deficit ballooned to 16 per cent of GDP. Many of those loans were risky and were backed by companies like AIG, which found itself in trouble.

The government had to pump money into the banking system to keep it afloat. It took control of the country's three major banks.

Meanwhile, Britain bought a 57.9 per cent interest in the Royal Bank of Scotland after shareholders balked at the bank's plan to sell them billions of new shares. Had the British government not stepped forward, the country's second largest bank could have gone under.

The British government also bought a controlling interest in Lloyds Banking group — the country's third largest bank — in exchange for insuring more than $472 million in risky loans.

Now: The Royal Bank of Scotland and Lloyds Banking Group remain "wards of the state," however the straits are not as dire as they were a year ago. Lloyds is mulling over a plan to raise money by issuing more stock. If it pans out, the government's stake in the bank would fall from about 62 per cent to 43.5 per cent.

The Royal Bank of Scotland reported a small pre-tax profit for the first six months of this year — but recorded a loss of a billion pounds after paying taxes and dividends to the government. While the bank said it's not finished writing off bad debts, it expects to return to profitability — perhaps by 2011.

Iceland's government is expecting two more years of economic contraction — and doesn't see a quick end to its involvement in the country's banking system. The OECD is urging the country to explore joining the Euro zone as soon as feasible. It warns that interest rates will remain high for some time.

Iceland's economic downturn has been felt in Canada. There's been a drop in the number of shoppers heading from Iceland to Newfoundland and Labrador.

Canadian banks

Then: In 2008, the World Economic Forum rated Canada's banking system No. 1 in the world. The U.S. came in right behind — Namibia.

There are far fewer banks in Canada than in the United States. Canadian banks typically hold larger cash reserves than American and European banks — and they weren't heavily exposed to the U.S. sub-prime mortgage market. The Canadian Imperial Bank of Commerce did take a big hit through it U.S. holdings, but sold more than $2.9 billion in stock to cover its losses.

As well, the federal government's refusal to allow Canada's banks merge with larger international banks may have saved them from giant failures like the Royal Bank of Scotland.

Now: While bank profits did take a hit, all the banks posted strong profits in the third quarter of 2009. Three banks — National Bank, Royal Bank, BMO — actually reported record earnings in the quarter ending July 31.

Canadian housing market

Then: The housing market peaked in May 2008 when sales and prices hit record levels across the country. Seemed everyone wanted a piece of the action. It didn't take long for the market to be flooded with a glut of listings and by October — with the world gripped by economic turmoil — people stopped buying homes.

Canada's largest markets — including Toronto, Vancouver and Vancouver — saw prices come down significantly. The Canadian Real Estate Association predicted a bleak winter, and a year of declining sales and prices.

Now: Something happened to Canada's housing market in the second quarter of 2009. Perhaps it was record low interest rates, or lower house prices or a rapid drop in the number of new listings. Or maybe it was all three — but buyers returned to the real estate markets.

By July, CREA was reporting that sales of used houses hit an all-time high and that average prices had returned to pre-recession levels. However, the association noted that stronger activity in some of the country's most expensive markets was skewing the average price.

On Sept. 9, 2009, RBC Economics reported that housing affordability was continuing to improve, hitting levels not seen since before the latest housing boom.

Detroit 3

Then: What do you get when you build big gas guzzling vehicles as gasoline prices soar to record levels? A major drop in already weak sales.

United Auto Workers leave the Pontiac Assembly Center in Pontiac, Mich., June 1, 2009, the same day General Motors filed for bankruptcy protection. (Carlos Osorio/Associated Press)Chrysler, Ford and General Motors were spending money trying to convince people to buy their cars faster than they could sell them. With too many factories and employees, the automakers were working on a business plan that counted on growing sales for years to come.

Toss in strengthening foreign competition and a bit of economic turmoil, and you have a recipe for disaster.

Chrysler and GM said that without government help, they would run out of money and be forced into bankruptcy. Ford said things were tight, but it might be able to get through without government help.

The U.S. and Canadian governments came through with billions in aid for the car companies. But they attached strict conditions:

• The companies would have to restructure and focus on their core businesses.
• Contracts with unions would have to be renegotiated.
• The companies would have to put far more emphasis on fuel-efficient vehicles.

Now: On July 10, 2009, General Motors emerged from bankruptcy protection, a much smaller company owned mostly by the American government. The Canadian government and GM employees also hold large stakes in the company.

GM dropped its Pontiac brand and announced plans to sell its Saturn, Saab, Hummer and Opel operations.

The company's new focus on four core brands — Chevrolet, Cadillac, Buick and GMC — will allow GM to focus its resources in fewer places.

GM says it expects to pay back $50 billion in government loans by 2015.

Chrysler sought bankruptcy protection in April and emerged two months later after Italian automaker Fiat acquired most of the company's assets.

"We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas," Fiat CEO Sergio Marchionne said in a release.

"Work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward," he said.

The new company starts life with hundreds of fewer dealerships, a reduced debt load and lower labour costs.

As for Ford, the company managed to avoid bankruptcy protection and did not seek government bailouts. It reported a surprise small profit in the second quarter of 2009. On Sept. 8, 2009, Ford and the Canadian Auto Workers union began talks on cutting labour costs. Ford wants the union to match cost-cutting contracts it signed with Chrysler and GM earlier in the year.

Consumers

Then: Americans were spending like there was no end to the supply of easy money in 2006. According to figures released by the U.S. Commerce Department in February 2007, the savings rate south of the border was minus one per cent, the lowest savings rate since 1933 when it was –1.5 per cent.

Spending a lot of money might be good for the economy, but when you spend more than you earn, you'll wind up with a large bill one day that has to be repaid. And then you stop spending, sending the economy into a tailspin.

As the economy imploded through 2008, Americans started saving again. By April 2009, the U.S. Commerce Department reported that the savings rate soared to 5.7 per cent — the highest since February 1995.

Canadians have tended to save more than their American neighbours — but spending patterns over the past few years have not been that different. In September 2005, a report by CIBC World Markets found that Canadians, too, were spending more than they were saving — thanks mainly to rapidly rising real estate prices. The report pegged Canada's savings rate at –0.5 per cent.

Now: Canadians and Americans are saving more of what they earn now — despite record-low interest rates. But they're also opening the purse strings — just a little.

Spending on homes and cars is up on both sides of the border, thanks mainly to record-low interest rates and — south of the border — government incentives to get people to trade in old cars for new ones. Those dealer incentives haven't hurt either.

But are things looking up overall?

A report by RBC Economics found that home ownership became more affordable in the second quarter of 2009. However, it suggested that affordability likely won't get any better as increased demand pushes prices up across the country and interest rates eventually start rising again.

A recent poll concludes that Canadians are optimistic about where the economy is going. And on Sept. 10, 2009, the Bank of Canada said the economy may grow faster in the second half of this year than it had previously forecast.

"Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are supporting domestic demand growth in Canada," the bank said in a statement.

The central bank also said it would keep its key overnight lending rate at a record low of 0.25 per cent through the middle of 2010.