A recession is the decline of a nation's gross domestic product (GDP) over two or more consecutive quarters. It is also referred to as a period of economic decline and reduced economic activity. During recessions, many macroeconomic indicators vary in a similar way. GDP, employment, investment spending, capacity utilization, household incomes; business profits and inflation all fall, while bankruptcies and the unemployment rate rise. Here is a list of recessions that occurred since the Great Depression. But no recession of the post-World War II era has come anywhere near the depth of the Great Depression, which lasted 55 months.
The Recession of 1937 is also called the Roosevelt Recession and is among the worst recessions of the 20th century which lasted for almost 13 months. The 1937 recession was preceded by a decrease in deficit spending and an increase in the reserve requirements of banks required by the Federal Reserve. It is a perfect example of how a drop in government spending and tight monetary policy lead to economic disaster. Unemployment remained high but was considerably lower compared to 25 percent rate seen in 1933.
The Recession of 1945 lasted for only 8 months, between February and October 1945. The decline in government spending at the end of World War II led to an enormous drop in gross domestic product, making this technically a recession. This was the result of demobilization and the shift from wartime to peacetime economy. GDP plunged 12.7 percent but unemployment rate stood at 5.2 percent.
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This recession lasted 11 months between November 1948 and October 1949. It was a brief economic downturn, while forecasters at the time expected much worse, perhaps influenced by the poor economy in their recent life time. During this period GDP declined 1.7 percent and unemployment reached 7.9 percent.
This recession lasted 10 months between July 1953 and May 1954. It occurred because of a combination of events during the earliest parts of the 1950s including Post Korean War contraction and the tightening of monetary policy due to inflation. During this period GDP declined 2.6 percent and unemployment peaked 6.1 percent.
The Recession of 1958 was a sharp worldwide economic downturn in 1958, and the most significant one during the post-World War II boom between 1945 and 1970. It lasted 8 months between August 1957 and April 1958. During this period GDP declined 3.1 percent and unemployment peaked 7.5 percent.
This was yet another chapter in the modern economic cycle that has shown its ugly side so many times to the U.S., as well as to the world. This recession was characterized by astronomically high unemployment rates, incredibly high inflation, and a bad Gross National Product rating. It lasted 10 months between April 1960 and Feb 1961. During this period GDP declined 1.6 percent and unemployment peaked 7.1 percent.
This recession was preceded by a period of unsustainable growth that led to accelerating inflation, which rose from 3.1 percent in 1967 to 4.3 percent in 1968, 4.9 percent in 1969 and 5.3 percent in 1970. Many contemporary observers attributed this boom and bust pattern to the fiscal policy stance of the time. It lasted 11 months between Dec 1969 and Nov 1970. During this period GDP declined 0.6 percent and unemployment peaked 6.1 percent.
The recession of 1973 was the direct result of OPEC raising their price for a barrel of oil from $4 to $40. This threw all of the developed nations into turmoil. This was due to the fact that America and other countries made the decision to preserve their own natural resources in favor of using cheap Arabian oil. It lasted 16 months between Nov 1973 and March 1975. During this period GDP declined 3.2 percent and unemployment peaked at 9 percent. The period is remarkable for rising unemployment and high inflation.
1980’s Double Dip Recession
The “double dip” or W-shaped recession of the early 1980s was actually two separate recessions interrupted by a very short (two quarter) expansion. Since the expansion was so short and the causes of both recessions were the same, most analyses combine these two recessions. This recession represents the deepest and longest recession in the post-war period.
GDP rate fell by more than 2 percent in both recessions and the rate reached double digits since the Great Depression. The unemployment rate rose from6.3 percent in the first quarter of 1980 to 10.8 percent at the end of 1982.
Early 1990’s Recession
The early 1990’s recession was followed a particularly long period of recovery and expansion from 1983 through 1988. The early 1990s recession was caused by a lot of adverse financial stimuli on the economic environment of the early 90s. The hardest hit areas have been financial firms, banks, thrifts, and insurance companies. This produced tight money without a tight monetary policy by the Federal Reserve. It lasted 8 months between July 1990 and March 1991. During this period GDP declined 1.4 percent and unemployment peaked at 7.8 percent.
Early 2000’s Recession
The early 2000's recession in the United States was felt in 2002 and 2003. It was characterized by large layoffs, outsourcing, and a jobless recovery, with many formerly high-paid manufacturing and professional employees being forced into much lower paid service positions. However, many economists didn't consider this as a recession since two consecutive periods of negative growth didn't transpire. The collapse of the dot.com bubble was truly the cause of these recessions, as well as the attacks that occurred on September 11th on the World Trade Center Towers in New York City. It lasted 8 months between March 2001 and Nov 2001. During this period GDP declined 0.3 percent and unemployment rose to 6.3 percent.
2007’s Great recession
The global financial crisis of 2007 has cast its long shadow on the economic fortunes of many countries, resulting in what has often been called the ‘Great Recession’. It lasted 18 months between Dec 2007 and June 2009. During this period GDP declined 4.1 percent and unemployment spiked to 10.2 percent.
It started as seemingly isolated turbulence in the sub-prime segment of the US housing market but mutated into a full blown recession by the end of 2007. The subprime mortgage crisis led to the collapse of the United States housing bubble. Falling housing-related assets contributed to a global financial crisis, even as oil and food prices soared. The crisis led to the failure or collapse of many of the United States' largest financial institutions: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and AIG, as well as a crisis in the automobile industry.