The World

1 Washington

A Frail Economy Sputters Ahead

The deepest recession since the 1930s cast a shadow over the year, as the U.S. economy hemorrhaged jobs, manufacturing continued to erode, and housing prices failed to recover from the previous year's crash. Unemployment rose to 10.2%--the highest rate in 26 years--despite the Obama Administration's stimulus efforts, which pumped billions into the economy. Detroit was hit especially hard: Ford saw a steep drop in sales, Chrysler was taken over by Italian firm Fiat, and GM briefly entered bankruptcy. One bright spot was Wall Street, where stocks reversed much of 2008's decline. The economy showed encouraging growth in the third quarter, but with jobs still scarce, the impact of the Great Recession lingers.

Continued pain, with modest gains

UNEMPLOYMENT RATE

JAN. 7.6%

OCT. 10.2%

NOV. 10%

AVERAGE PRICE OF EXISTING HOMES

JAN $164,800

JUNE $182,00

OCT. $173,100

DOW JONES INDUSTRIAL AVERAGE

JAN, 2 - 9034

MARCH 9 - 6547

DEC. 14 - 10,501

SOURCES: U.S. DEPARTMENT OF LABOR; NATIONAL ASSOCIATION OF REALTORS

2 Pakistan

On the Edge

The country that poses the greatest threat to U.S. security may be neither of those where American boots are on the ground. Beset by feckless leadership, preoccupied with its rivalry with India and infested with militant groups, Pakistan in 2009 became a viper pit of terrorist plots and political malaise. The death of Taliban leader Baitullah Mehsud in an August drone strike ratcheted up the stakes. After months of planning, Pakistan's Operation Path to Deliverance sent 28,000 troops to root out insurgents in South Waziristan in October. As threatened, extremists responded by unleashing attacks throughout the country.

3 Afghanistan

A Looming Quagmire?

While General Stanley McChrystal drew praise for recalibrating U.S. military strategy in Afghanistan, the cost of the conflict kept being hammered home. In October, 58 U.S. soldiers were killed, the highest monthly tally since the war began in 2001. President Obama's plan to commit 30,000 more troops before beginning a drawdown in July 2011 led critics to question the logic of fighting a war that cannot, perhaps, be cleanly won.

4 Washington

Fighting for a Health Care Cure

The battle over health care spread from Capitol Hill to town halls nationwide, as President Obama made reforming the $2.5 trillion industry his top domestic priority. At public meetings with lawmakers, angry voters denounced the supposed creeping influence of government in their lives. Democrats, meanwhile, struggled to sell a pricey overhaul amid a steep economic slump. Despite the poisonous debate, the pro-reform camp notched victories. On Nov. 7, the House passed a sweeping bill by a slim, five-vote margin. With Senators still haggling over their $848 billion measure, a final vote may be pushed to 2010.

5 Somalia

Sinister Seas