History of Recessions in the United States
History of Recessions in the United States
Causes, Length, GDP, and Unemployment Rates for Every U.S. Recession
By Kimberly Amadeo Updated on July 9, 2024
There have been 19 noteworthy recessions throughout U.S. history. The National Bureau of Economic Research determines when a recession starts and ends, and the Bureau of Economic Analysis measures the gross domestic product (GDP) that defines recessions. The Bureau of Labor Statistics reports on the unemployment rate.
Unemployment often peaks after a recession ends because it's a lagging economic indicator. Most employers wait until they're sure the economy is back on its feet again before hiring permanent employees.
Key Takeaways
The nation's first recession resulted from land speculation in 1797 when the First Bank of the United States and U.S. Treasury Secretary Alexander Hamilton expanded the money supply.
The Great Depression that lasted from 1929 through 1938 was actually two of the worst recessions America has ever experienced occurring back to back.
Two recessions also occurred back to back in 1980 through 1982, aggravated by the Iranian oil embargo.
America averages a recession about once every six years.
Early Major Recessions
The hallmark of these four early recessions is that the federal government could do little to stop them. Their harshness and unpredictability led to support for a national central bank.
1797: The Panic of 1797 resulted from land speculation. The First Bank of the United States and U.S. Treasury Secretary Alexander Hamilton expanded the money supply, leading to the boom and bust.1
1857: Embezzlement at the Ohio Life Insurance and Trust Company's New York branch triggered a panic. Investors lost faith in paper money when a ship carrying gold to New York sank en route. Businesses couldn't make their payrolls and commerce ground to a halt.2
1873: The construction of the national railway system created speculation that led to the collapse of the largest U.S. bank. The recession lasted until 1879.3
1893: The Reading Railroad failed, leading to other railway failures and a stock market crash. Banks suspended cash payments, leading to the hoarding of cash and bank failures.4
20th Century Recessions
There were 12 recessions in the 20th century. The Great Depression was technically two of the nation's worst recessions occurring back to back.
1907
The "Panic of 1907" lasted from May 1907 to June 1908. It was caused by speculators' losses that spread to trust companies. These firms acted like banks but they had lower reserves. Congress created the Federal Reserve System to prevent future collapses.56
1929 to 1938 (The Great Depression)
The biggest economic crisis in U.S. history was two closely related recessions.78 The first downturn was from August 1929 to March 1933, with a record 12.9% contraction in 1932.9 The second downturn lasted from May 1937 to June 1938. Unemployment reached 24.9% in 1933 and remained in the double digits until WWII began.10
Chart LINK
Several factors combined to create the Great Depression. The Fed raised interest rates in the spring of 1928 and continued despite the recession. The 1929 stock market crash destroyed businesses and life savings. A 10-year drought in the Midwest created the Dust Bowl that devastated farmers.11
The New Deal ended the first recession, boosting growth by 10.8%.12 The second recession ended when the drought did, and the government increased spending for World War II.13
1945
This recession lasted eight months, from February to October. It was a natural result of the demobilization of World War II.1415
1949
This 11-month recession began in November 1948 and lasted until October 1949 when unemployment peaked at 7.9%.1416 It was caused by the Fed raising interest rates too quickly.15
Chart LINK
1953
This recession lasted 10 months from July 1953 to May 1954.14 It resulted from tightened monetary policy following the Korean War.17 Unemployment didn't reach its peak of 6.1% until September 1954, four months after the recession ended. GDP contracted by 2.2% in the third quarter of 1953 and by 5.9% in the fourth quarter. It contracted by 1.9% in the first quarter of 1954.1819
1957
This recession took place from August 1957 to April 1958.14 GDP fell 4.1% in the fourth quarter of 1957, then it contracted to a low of 10.0% in the first quarter of 1958.20 Unemployment didn't reach its peak of 7.5% until July 1958.21 The Fed's contractionary monetary policy caused this economic slowdown.22
1960
Starting in April 1960, this recession lasted 10 months until February 1961.14 GDP was -2.1% in the second quarter of 1960, then it rose by 2.0% in the third quarter but it was down by 5.0% in the fourth quarter.19 Unemployment reached a peak of 7.1% in May 1961.23
Note
President John F. Kennedy ended the 1960 recession with stimulus spending.24 His opponent, Richard Nixon, blamed the recession for costing him the election.25
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