In contrast to the relatively short duration of most recessions, periods of expansion tend to last much longer, helping the economy expand over time. The shortest expansion period from the mids until lasted only 24 months, from April to April The longest expansion continued from March to March , setting a record of consecutive months of growth.
Chart 1 plots both the level of real GDP in chained dollars and the percentage annual rate of growth in real GDP each quarter over a period of about 60 years ending in the final quarter of Periods of economic contractions or recessions as defined by the NBER are shown in the chart as gray bars.
The blue line in the chart measured in billions of chained dollars on the right axis shows the growth in the economy over time as measured by real GDP. You can see that U. While the overall trend is clearly upwards, the chart shows that real GDP tends to flatten out or dip around recessions; this is especially noticeable during the longer recessions of and If you were to examine monthly payroll employment data for the same six decades, the growth pattern would be similar, although the downturns around recessions would be even more pronounced.
We can examine the short-term gyrations in real GDP around recessions more closely by looking at the red bars in the chart. Bars above the zero line indicate a positive annualized growth rate in real GDP for that quarter, while bars dropping below the zero line signify declines in the real GDP negative growth. However, negative growth is not the only indicator that signifies a recession.
Just as it is possible to have some quarters of positive real GDP growth during a recession, it is also possible to have some quarters of negative real GDP growth at a time when there is not a recession. Thus, you can see why economists look at a variety of indicators to determine whether or not the economy is in a recession. In late and early the U. For instance, some Baby Boomers, who were born starting in the mids, have lived through nearly a dozen.
Economists typically define a recession as occurring when the economy endures two or more consecutive quarters of decline, in terms of the growth rate of the country's gross domestic product GDP. The length and frequency of recessions can vary, though last year the U.
Since , the average recession has lasted about 15 months. Before , the U. Here is a look at every recession that's hit the U. The global economy has not yet entered a recession, but economists are predicting that the effects of the coronavirus pandemic -- including businesses being shut down and millions of workers staying at home -- will cause U. GDP to decline for at least the first two quarters of At that point, after a prolonged period of GDP decline, then the economy would have technically entered into a recession.
If that is the case, the impending recession will come after a record expansion for the economy that lasted over a decade months, as of December.
Goldman Sachs is projecting that U. The country's GDP fell 4. It occurred on the tail end of a subprime mortgage crisis where the U. That also spurred on a banking crisis, as numerous financial institutions that had taken on high-risk mortgage-backed securities saw those portfolios wiped out as borrowers defaulted on their loans.
Huge financial institutions such as Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers all collapsed as a result in , leading to a stock market crash that saw the major indexes lose more than half of their value over the course of the crisis. Those losses left the stock market in a vulnerable place that got worse in the fall of , when the devastation of the September 11, terrorist attacks and a series of major accounting scandals at corporations like Enron and Swissair spurred a stock market crash.
The resulting recession was relatively short, at just eight months, and also shallow, as GDP dipped only 0. A mild recession kicked off in , as the Federal Reserve had been slowly raising interest rates for over two years to keep inflation in check.
Those moves slowed down the economy, which then took a hit when Iraq invaded Kuwait in the summer of followed by U. The recession lasted just eight months, with GDP declining 1. Decreases of Newfound electric street railways, the steel industry, and advanced communications continued to propel the U.
Advancements in lighting fuelled the oil market, and better business management kept the recession from being worse. The Panic of in England rippled overseas to America, causing a slight recession for ten months between July and May On the brink of bankruptcy due to risky Argentina investments, the near-collapse of Barings Bank in London caused a global financial distrust that other large banks, including Rothschilds, attempted to salvage.
It was the last recession before the closing of the United States Reading Railroad, which would bring on the Panic of less than two years later. The Panic of lasted for four years and led to the Free Silver Movement, which attempted to replace the former American gold standard.
Additionally, the overextension of credit for the Philadelphia and Reading railroads caused even more economic downturn, as well as declining stock costs, hundreds of bank closures, and also the declining prices for wheat, which precipitated the panic.
Silver reserves dropped as dark horse candidate William Jennings Bryan became the Democratic candidate on a platform of abandoning the gold standard. William McKinley championed the gold standard, and his election would put an end to the silver movement and stabilize the economy. You may also like: Best value colleges in America. The Panic of , followed by the first stock market crash, was set off by a fight over control of the Northern Pacific Railway that would create the Northern Securities Company.
Those events, along with the assassination of President William McKinley in September , set off a two-year recession.
Northern Securities was sued by the federal government under the Sherman Antitrust Act, resulting in its dissolution. The first global financial crisis of the century, the Panic of —also called the Knickerbocker Crisis—was a three-week collapse of the stock market that caused a number of financial institutions to close their doors.
A failed takeover attempt of United Copper by two speculators led to a run on Mercantile National Bank, the financier of the venture. The month recession eventually led to the creation of The Federal Reserve system in The fallout from the Sherman Antitrust Act, which saw a number of major companies dissolved, including Standard Oil, helped set off the Panic of The country recovered in , thanks to a good farming season accompanied by poor harvests in Europe.
The fallout from the panics of and set off another nearly two-year recession marked by income and production declines. The first Balkan War in put a strain on the world's economy and set the stage for World War I, with the consequences being felt in the U. Production declined at the end of World War I, along with a surge in unemployment from soldiers returning home, creating a brief seven-month recession from The U.
You may also like: 50 best colleges on the East Coast. The economy limped into the Roaring Twenties, with representing the most deflationary year in American history.
The tide turned as people began spending money on newer appliances like refrigerators, washing machines, and radios. The Roaring Twenties took a month break from , as industrial expansion declined, helping set off a mild recession. The Revenue Act of , a sweeping income tax reform proposed by Treasury Secretary Andrew Mellon and endorsed by President Calvin Coolidge, helped the economy recover by investing in businesses.
The recession that precipitated the Great Depression was brought on by Henry Ford ending sales of the Model T and laying off 60, workers while converting factories to produce the Model A. Demand for the Model A in quickly outpaced production, leading to increased hiring and economic stabilization.
The Roaring Twenties came to an abrupt halt, beginning with the Stock Market Crash of , setting off the longest and deepest economic downturn in history. Dependence on the gold standard, droughts in the southeastern states, and increased tariffs pushed unemployment to a peak of You may also like: Best places to retire on the West Coast. The sharp decline in government spending after World War II caused a brief recession in , although the unemployment rate was mostly unaffected.
Policies enacted to help returning servicemen helped spur the auto and housing markets, helping to end the eight-month downturn. The unemployment rate doubled to 7.
The month downturn came to an end as government spending began to increase during the lead-up to the Korean War. Rising interest rates and decreased government spending at the end of the Korean War contributed to this brief, month recession. Unemployment climbed from a post-World War II low of 2. A sharp decline in new automobile sales, alongside high interest rates that stalled the housing market and tightened monetary policy, which was designed to curtail inflation, produced this eight-month downturn in the economy.
To ease the effects of the recession, the government relaxed mortgage rules, lengthened unemployment benefits, and accelerated construction projects. This month economic slide was caused by the Fed tightening monetary policy, once again in hopes of mitigating inflation. The recession of preceded the third-longest period of growth in American history , lasting nearly nine years—shorter only than the economic growth in the s and s.
Newly-elected President John F. Kennedy put an end to the recession with a point stimulus plan that included a minimum wage, unemployment benefits, and widened social security benefits. You may also like: How the richest person in each state made a fortune. A push to balance the budget deficit from the Vietnam War, accompanied by the Fed tightening monetary policy to control inflation, ended the eight-plus years of growth the country had seen.
The unemployment rate reached its peak at 6. President Richard Nixon launched a series of policies that would temporarily put a stop to the downturn.
Inflation doubled to 8. Tax cuts in April helped spur spending and investment, leading the economy to grow for the remainder of The Federal Reserve increased rates in the late s in an effort to fight stagflation, leading to the recession.
The economy experienced a temporary recovery from the recession beginning in the summer of , although the continued fight against inflation would spur another the following year.
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