A recession is defined as a contraction of economic growth for at least two quarters, measured by gross domestic product (GDP). Beginning with an eight-month crisis in 1945, the American economy has gone through 12 different recessions since the Second World War.
On average, post-war American recessions lasted only 10 months, while periods of expansion lasted 57 months. Some economists predict that the COVID-19 pandemic will end the longest period of economic expansion ever recorded, which lasted 128 months – more than a decade – from mid-2009 to early 2020.
February to October 1945: end of World War II
World War II was an economic boon for the American economy as the government has injected tens of billions of dollars into manufacturing and other industries to meet wartime needs. But with the surrender of Germany and Japan in 1945, military contracts were cut and soldiers began to return home, competing with civilians for jobs.
As public spending dried up, the economy plunged into a severe recession with a contraction of GDP by 11%. But the manufacturing sector adapted to peacetime conditions faster than expected and the economy recovered in eight months. At worst, the unemployment rate was only 1.9%.
November 1948 to October 1949: slowdown in post-war consumer spending
When rations and war restrictions were lifted after World War II, American consumers rushed to make up for years of pent-up purchases. From 1945 to 1949, American households bought 20 million refrigerators, 21.4 million cars and 5.5 million stoves.
When the consumer spending boom started to stabilize in 1948, it sparked an 11-month “mild” recession in which GDP fell only 2%. Unemployment has increased considerably, however, with all former GIs returning to the labor market. At its peak, unemployment reached 7.9% in October 1949.
July 1953 to May 1954: Korean post-war recession
This relatively short and moderate recession followed the scenario of the post-war recession, as the government’s heavy military spending dried up after the end of the war. Korean War. During a 10-month contraction, GDP lost 2.2% and unemployment peaked at around 6%.
The post-war Korean recession was exacerbated by the Federal Reserve’s monetary policy. As would happen in many future recessions, the Fed raised interest rates to combat the high inflation caused by an influx of dollars into the war economy. Rising interest rates slowed inflation, but also weakened confidence in the economy and sapped consumer demand.
In fact, one of the main reasons the recession was so short is that the Fed decided to cut interest rates in 1953.
August 1957 to April 1958: Asian flu pandemic
An Asian influenza vaccine transported by helicopter to parts of the United States affected by the epidemic, 1957.
Walter Sanders / The LIFE Image Collection / Getty Images
In 1957, an Asian flu pandemic spread from Hong Kong across India and into Europe and the United States, causing countless deaths and ultimately killing more than one million people worldwide. The disease also triggered a global recession that reduced US exports by more than $ 4 billion.
Again, economic problems were compounded by higher interest rates by the Fed to slow inflation, which had increased throughout the 1950s. Consumer spending fell and the US economy sank in an eight-month recession in which GDP fell 3.3% and unemployment reached 6.2%.
April 1960 to February 1961: the recession that cost an election in Nixon
Just two years later, Richard M. Nixon was vice president when the nation sank into a new recession. Nixon blamed the economic crisis for his loss to John F. Kennedy in the 1960 presidential election.
There were two main causes for this 10-month recession, in which GDP fell 2.4% and unemployment reached almost 7%. The first was what economists call “gradual adjustment” in several major industries, the most notable automobiles. Consumers began buying more compact foreign cars, and American automakers had to reduce their stocks and adapt to changing tastes, which resulted in a temporary reduction in profits.
The second cause is the Fed again, which quickly raised interest rates in the aftermath of the previous recession in a constant effort to control inflation.
Not only was Nixon blamed for triggering the recession, but JFK took the credit for ending it with a series of stimulus spending in 1961 and an expansion of Social security and unemployment benefits.
December 1969 to November 1970: curbing inflation in the 1960s:
This extremely mild recession was another course correction developed by the Fed under the Nixon administration. After the previous recession, the U.S. economy experienced a decade-long expansion that saw inflation climb to over 5% in 1969.
In response, the Fed again raised interest rates, which had the effect of cooling the warm economy of the 1960s while only reducing GDP by 0.8% over an 11-month recession. Unemployment rose to 5.5% over the same period. When the Fed cut rates again in 1970, the economy returned to growth mode.
November 1973 to March 1975: the oil embargo
View of a handwritten note on the padlocked door of a restaurant in Philadelphia, Pennsylvania, July 1973. The sign reads “Closed until Monday 6 am due to an energy crisis by order of the mayor”, referring to the ‘OPEC (Organization of Arab Petroleum Exporting Country) the oil embargo that led to a power shortage in the United States.
Leif Skoogfors / Getty Images
This recession marked the longest economic crisis since the Great Depression and was brought about by a perfect storm of bad economic news.
First of all, there was Oil embargo of 1973, imposed by the Organization of the Petroleum Exporting Countries (OPEC). With the limited supply of oil, gas prices have soared and the Americans have cut back elsewhere.
At the same time, Nixon attempted to reduce inflation by instituting a price and wage freeze in major US industries. Unfortunately, companies were forced to fire workers to offer the new wages, which were still not high enough for consumers to pay the new fixed prices.
The result was “stagflation”, a stagnant economy with high inflation and weak consumer demand, and a recession that lasted five consecutive quarters of negative growth. Overall, the 16-month recession resulted in a 3.4% drop in GDP and a near doubling of the unemployment rate to 8.8%.
The Fed had no choice but to lower interest rates to end the recession, but that paved the way for rampant inflation in the late 1970s.
January to July 1980: second energy crisis and inflationary recession
Oil prices exploded again in 1979 due to supply disruptions Iranian revolution and increasing global demand for oil. This has resulted in high prices and long queues at the gas pump in the United States.
Meanwhile, inflation had reached a staggering 13.5% and the Fed had no choice but to raise interest rates, which dampened the booming economy of the late 1970s. The result was a tie for the shortest recession after World War II – only six months are starting to end – in which GDP fell only 1.1% but unemployment soared to 7 , 8%.
July 1981 to November 1982: double dip recession
This much more painful recession approached the short recession of 1980, introducing Americans to the term “double dip recession”.
For the third time in a decade, one of the triggers for the recession has been an oil crisis. The Iranian revolution was over, but the new Ayatollah Khomeini regime continued to export oil irregularly and at lower levels, keeping gas prices high.
At the same time, the timid increases in Fed interest rates in 1980 were not enough to slow inflation, so Fed chief Paul Volcker pushed interest rates down. new highs – 21.5% in 1982. The exorbitant rate brought down inflation, but had an impact on the economy, which fell 3.6% during the 16-month recession and saw unemployment peak more than 10%.
This long and deep recession finally ended with a combination of tax cuts and spending cuts. Ronald Reagan.
July 1990 to March 1991: S&L crisis and recession in the Gulf War
Unemployed Mike and Jean Richardson pictured with their child and a sign announcing his need to work during the 1990 recession.
Shelly Katz / The LIFE Images Collection / Getty Images
A multitude of factors led to the economic slowdown in the early 1990s. One was the failure of thousands of savings and credit institutions in the late 1980s, which particularly affected the mortgage market. Fewer mortgages meant new record levels of new construction, which had far-reaching effects on the economy as a whole.
While this may have been enough to send the economy into recession, Saddam Hussein of Iraq invaded neighboring Kuwait, a major oil producer. The ensuing Gulf War caused oil prices to double.
The economic crisis of October 1989 and the start of the North American Free Trade Agreement (NAFTA), which prompted American manufacturers to relocate their activities to Latin America, added to economic difficulties.
The combined result was an eight-month recession that saw GDP fall 1.5% and unemployment 6.8%. Even when the recession officially ended in 1991, it was followed by several quarters of very slow growth.
March to November 2001: the Dot-Com crash and September 11
Irrational exuberance is blamed for the stock market bubble that formed around Internet startups in the late 1990s and 2000. Investors have injected money into unproven companies, artificially inflating their values to unsustainable levels . When the internet bubble finally burst in 2001, the tech-rich Nasdaq lost 75% of its value and hordes of investors collapsed.
While the tech sector suffered a devastating blow, the rest of the economy stumbled until the The September 11 terrorist attacks overturned him for good. The early 2000s were also marked by large-scale corporate accounting scandals at Enron and poor stock market returns. The S&P 500 lost 43% of its value between 2000 and 2002.
Given the impact of the Internet crash on a generation of investors, the 2001 recession was relatively quick and shallow, with GDP down just 0.3% and unemployment down to 5.5%.
The economy was able to emerge from the 2001 recession on the strength of the housing sector, which grew even during the recession thanks to low interest rates.
December 2007 to June 2009: the great recession
WATCH: Here’s what caused the Great Recession
The longest and most catastrophic economic slowdown since the Great Depression, the Great Recession was part of a global financial crisis triggered by the collapse of the US housing bubble.
The double housing banking crisis caused shock waves in the stock market, and major indices like the S&P 500 and the Dow Jones Industrial Average lost half their value, gutting the retirement accounts of millions of Americans.
