Recession Dates Flashcards
2020
-Considered the greatest recession in the US since the Great Depression (GDP-wise). GDP dropped 31.2% second quarter of 2020, vs. falling 5.1% the first quarter
-Lasted just 2 months, the shortest recession on record. Third quarter the GDP recovered by about 33.8%, but not enough to make up for the shutdown’s losses.
-Unemployment peaked at 14.7% overall, with a 24.5% rate for part-time workers and 12.8% for full-time workers.
-Was considered an artificial recession due to the Covid pandemic leading to an unprecedented shutdown on a mostly world-wide scale
-Over 20 million jobs lost in the US during second quarter
Fed reduced fed funds rate to 0%, promising to keep it there until 2023. However they caved in earlier and raised the rates 2022, which cause a huge bear market that he or I didn’t foresee. That cost us all lots of money
2008-09
- Dubbed ‘The Great Recession’.
- The longest standing recession since the Great Depression (length-wise, not GDP drop-wise) at 18 months
- Highest shrink in GDP was 8.5% in Q4 2008.
- Unemployment peaked at 10% in October 2009
- The subprime mortgage crisis led to a global bank credit crisis in 2007. However, the damage spread to the general economy in 2008 through the widespread use of derivatives.
- Many banks were over-leveraged, not able to meet the huge margin calls when the mortgage crisis blew up
2001
- Dubbed the dot com bubble. Had a catalyst that led to second-order effects, eventually leading up to the crash & recession
- Recession lasted 8 months (Mar-Nov 2001). Unemployment peaked at 6.3% in June 2003 after the recession was over.
- Y2K was the initial catalyst. Everyone was freaking out about the year 2000 and whether the old software could handle dealing with the older software. So there was a huge rush to purchase newer software designed to work well with the newer dates
- The huge surge of purchasing newer software led to overvaluing of many software companies, and many of them failing.
- However it didn’t end there. The 9/11 attacks further exacerbated the recession.
1990-91
- Was a combination of the Savings & Loan crisis, higher interest rates, and Iraq’s invasion of Kuwait
- GDP drop peaked at -3.6% in Q4 1990, unemployment peaked at 7.8% in June 1992
- Savings & Loan associations were created to make homeownership more accessible to working class people. Funded by consumer deposits
1980-82
- Was actually a double-whammy of 2 recessions in one
- Initial recession wave of 6 months, followed by second wave of 16 months. Worst GDP drop was 8.0% during Q2 of 1980. Unemployment was above 10% for 10 months.
- Initial recession was caused by the fed, raising interest rates to combat inflation. However, soon after there was an Iranian oil embargo, severely impacting the U.S.’s oil supply, leading to a much longer second wave recession of 16 months (compared to initial wave’s 6 months).
1973-75
- Lasted 16 months. Led to stagflation, with GDP shrinkage ranging from 1.5% to 4.8%. Unemployment reached peak of 9.0%, 2 months after the recession ended.
- Many blame OPEC’s oil embargo, quadrupling gas prices, but President Nixon also contributed to this via the wage-price controls
- Wage controls made salaries too high, forces employers to lay off more workers
- Nixon taking the US off the gold standard led to a huge spike in gold prices, along with plummeting of the US dollar.
1970
- Lasted 11 months, was a relatively mild recession
- Triggered by lots of deficit spending, increased inflation a lot, peaked at 5%, eroded the value of money, overvalued companies, led to decreased overall welfare
- Also coincided with an attempt to shorten the deficit spending gap, as well as the fed rate hikes to combat inflation
1960
- Lasted 10 months (Apr 1960 to Feb 1961)
- GDP declined 2.4%, unemployment reached 7.1% in May 1961
- Recession officially ended after JFK added stimulus spending
- Cost Nixon the presidential election that cycle
1957
- Fed raising rates mainly caused this recession, but the Asian flu made it worse, cutting US exports by 4 billion
- Lasted 8 months (Aug 57 to Apr 58). GDP fell 4.1% in Q4 1957, then 10% in Q1 1958. Unemployment peaked at 7.5% in July 1958
- Supposedly ended when President Eisenhower passed highway & infrastructure spending act
1953
- Happened after the Korean War (50-53) winded down
- Lasted 10 months, relatively short. GDP fell 2.2% Q3 then 5.9% Q4
- Government spending was shrinking, coincided with interest rates rising to combat inflation.
- One of the reasons the recession was relatively short was the Fed lowered interest rates pretty quickly
1949
- Followed the post-WWII economic rush
- Lasted 11 months, 2% GDP drop, unemployment peaked at 7.9%
- Wartime rationing, restrictions lifted after WWII in 1945. Led to almost 4 years of crazy boom in spending. Then the demand leveled off in 1948, triggered a mild recession and drop in GDP
- With many GI entering back into the job market, naturally led the Unemployment rate to grow to 7.9% at one point
- Also was caused by the Fed raising interest rates too quickly
- Forecasters expected a much worse recession, biased mostly by the poor economy in their recent lifetime
1945
- End of WWII
- Lasted 8 months, 11% GDP drop
- Government funding dried up, military contracts did too. Economy naturally dipped into a huge recession with a 11% GDP drop
1929-38
-The Great Depression
-Consisted of of 2 recessions: 1929(Aug)-33(Mar), 1937(May)-38(Jun). GDP dropped 12.9% and 24.9%, respectively
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1907
- The Panic of 1907 (May 1907 to June 1908)
- Lasted about 13 months
- Caused by speculators’ losses that spread to trust companies (acted like banks, but with smaller reserves)
- This panic led Congress to create the Federal Reserve System to prevent future collapses like this one
Who officially declares when recessions start and end and via what criteria?
The National Bureau of Economic Research (NBER). Consists of a bunch of economists.
They officially date the beginning of a recession at the peak point of the preceding expansion, and the end at the lowest point of the ensuing downturn
