The recession was declared around June 2008, as having begun in December 2007.
The housing market began to go down in late 2006. This led to a credit crunch as banks raced to tighten lending in mid 2007, which severely hampered the 2007 back to school and Christmas shopping seasons.
Nobody really understood how bad it was until it was too late. An estimate for instance said that if housing prices declined 20%, that it would cost 1% of GDP and increase unemployment slightly. This came from one of the Fed banks, I think KS City. They didn't realize how much the housing bubble was being used to sustain consumption via home equity lines of credit and such forth, nor the amount of exposure and "systemic risk" that the banks had exposed themselves too.
Since wages had not increased at all except slightly during the end of 2006, which was the first time since the 1990's when that had happened, it meant that a lot of the demand was being driven by credit of one form or another. When risk exposed banks began to see the writing on the wall and tightened the credit markets substantially to try and save themselves, they drove the economy into the ground, which came back and made their situation even more precarious as more mortgages went bad and triggered the byzantine network of liabilities that were now connected with it. That is what led to the collapse of several banks in 2008 and the bailouts later that year.
The economy was starting to enter the discussion by late 2007, especially among Romney supporters who felt Romney was better to handle economic issues compared to the other GOP contenders. This was redoubled later on when it became clear much too late in 2008 that McCain was out of his depth and looked it compared to Obama. National Security and yes oil prices were the dominant topic through mid 2008.
The recession itself wasn't really focused on, neither was housing. Instead, the focus was on the components that weakened the economy like as some said oil prices. Romney had hit McCain on offshore drilling and being against drilling in ANWR. In 2008, seeing an opportunity, McCain took a "for the good of the country flip flop" and began hammering Obama for opposing drilling offshore, while Gas prices were surging to their record peaks in August 2008. Obama had just completed his European speaking tour and McCain hit him for being more focused on global celebrity while people were paying $4 a gallon. The 1930's might have been one month away, but for August, it was playing out like 1979-1980, especially when Obama made the comment about inflating tires to save gas. The Rick Warren summit also occurred at this time, which combined with the Palin selection, helped to unify and enthuse the GOP base for the first time that cycle. Then it all went to hell...
The economy as an issue in and of itself dominated landscape from September 2008 until 2014. It was the top rated issue in polling months prior, but the political class is typically a day behind and a dollar short.
I mentioned previously how oil prices were significantly noticed with the rise in gasoline prices. Of course, in addition to a general short term rise in general prices as energy costs filtered through, oil prices also led to a large increase in home heating and cooling for many people.
The significance of the rise in oil prices is the increase they caused in general prices likely sparked off inflationary pressures and that's what led to the increase in the Fed Rate and interest rates in general.
https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135The Fed rate peaked at 5.25% at the end of July 2006. Although it was in 2007 that oil prices really spiked.
https://inflationdata.com/articles/inflation-adjusted-prices/historical-crude-oil-prices-table/It was likely the increase in interest rates combined with the increase in prices caused by the oil price spike that led to the number of mortgage defaults being as high as it was.
I'm not really sure caused the increase in oil prices, but it would be interesting to know what would have happened to the mortgage meltdown had the price of a barrel of oil remained in the $30-40 range (in today's dollars.)
In terms of the politics, I remember a similar situation, but I remember more about McCain's meltdown.
First, although McCain chose Sarah Palin because at the time she was regarded as something of a 'maverick reformer', I think it's likely he also chose her in part because she came from an oil state. The Republican slogans coming out of their convention was something like "yes to all of the above" but also, from Palin herself (or her speech writers) "drill, baby, drill."
In regards to McCain's meltdown, there were basically three events, if I recall correctly.
1. McCain accused Obama of trying to talk down the economy, and said something like "the fundamentals of the economy are strong."
2.McCain reversed course and, I believe, before the first debate, called for a postponement (or cancelling) of the debate and a postponing of campaigning. This looked like panic and Obama turned down the offer saying something like "President's sometimes have to be able to walk and chew gum at the same time."
3.Both McCain and Obama attended some meeting with various officials including Fed Chair Ben Bernanke and the Treasury Secretary, and, I believe Bernanke commented something like "Obama seemed knowledgeable and asked intelligent questions while McCain was silent."