History of economic recessions.
International Monetary Fund stated The Great Lockdown as the Worst Economic Downturn Since the Great Depression.
Of course! we had already anticipated that “Winter is coming”. Acknowledging that pandemic COVID-19 is the reason for the economic turmoil of 2020, I was curious to check the history of recessions and what caused them. However, this is not the very first time that our economy has been hit by a virus , the epidemic Asia flu was one of the factors causing recession of 1958.
Below is a brief summary of what I read on WikiPedia:
Annualized GDP change from 1923 to 2009. Data are annual from 1923 to 1946 and quarterly from 1947 to the second quarter of 2009.
Source: Wikipedia.
Great Depression: Date: Aug 1929–Mar 1933, Duration: 3 years 7 months, GDP decline: −26.7% .
Major Causes: A banking panic and a collapse in the money supply took place in the United States that was exacerbated by international commitment to the gold standard. Extensive new traffics and other factors contributed to an extremely deep depression.
Recession of 1937–1938: Date: May 1937–June 1938, Duration: 1 year 1 month, GDP decline: −18.2%
Major Causes: The tight fiscal policy resulting from an attempt to balance the budget after New Deal spending; the tight monetary policy of the Federal Reserve; and the declining profits of businesses leading to a reduction in business investment.
Recession of 1945:Date: Feb 1945–Oct 1945, Duration: 8 months, GDP decline: −12.7%
Major Causes: The decline in government spending at the end of World War II led to an enormous drop in gross domestic product.
Recession of 1949: Date: Nov 1948–Oct 1949, Duration: 11 months, GDP decline: −1.7% The 1948 recession was a brief economic downturn.
Major Causes: Influenced by the poor economy in their recent lifetimes.
Recession of 1953: Date: July 1953–May 1954, Duration: 10 months, GDP decline: −2.6%.
Major Causes: The recession from 1953 to 1954 occurred because of a combination of events during the earliest parts of the 1950s. In 1951, there was a post-Korean War inflationary period and later in the year more funds were transferred into national security.
Recession of 1958: Date: Aug 1957–April 1958, Duration: 8 months, GDP decline: −3.7% .
Major Causes: Auto sales fell 31% over 1957, making 1958 the worst auto year since World War II. Housing construction slowed due to higher interest rates in 1955 and 1956.The virus epidemic of 1957–58 (the so-called “Asian flu”) most likely affected growth as sizable numbers of workers were sick at any one time during the epidemic.
Recession of 1960–61: Date: Apr 1960–Feb 1961, Duration: 10 months, GDP decline: −1.6%.
Major Causes: Another primarily monetary recession occurred after the Federal Reserve began raising interest rates in 1959.
Recession of 1969–70: Date: Dec 1969–Nov 1970, Duration: 11 months, GDP decline: −0.6%.
Major Causes:This relatively mild recession coincided with an attempt to start closing the budget deficits of the Vietnam War (fiscal tightening) and the Federal Reserve raising interest rates (monetary tightening).
1973–75 recession: Date: Nov 1973–Mar 1975, Duration: 1 year 4 months, GDP decline: −3.2%.
Major Causes: The 1973 oil crisis, a quadrupling of oil prices by OPEC, coupled with the 1973–1974 stock market crash led to a stagflation recession in the United States.
1980 recession: Date: Jan 1980–July 1980, Duration: 6 months, GDP decline: −2.2% .
Major Causes: The recession began as the Federal Reserve, under Paul Volcker, raised interest rates dramatically to fight the inflation of the 1970s. The early 1980s are sometimes referred to as a “double-dip” or “W-shaped” recession.
1981–1982 recession: Date: July 1981–Nov 1982, Duration: 1 year 4 months, GDP decline: −2.7%
Major Causes: The Iranian Revolution sharply increased the price of oil around the world in 1979, causing the 1979 energy crisis. Tight monetary policy in the United States to control inflation led to another recession.
Early 1990s recession in the United States: Date: July 1990–Mar 1991, Duration: 8 months, GDP decline: −1.4%.
Major Causes: After the lengthy peacetime expansion of the 1980s, inflation began to increase and the Federal Reserve responded by raising interest rates from 1986 to 1989. This weakened but did not stop growth, but some combination of the subsequent 1990 oil price shock, the debt accumulation of the 1980s, and growing consumer pessimism combined with the weakened economy to produce a brief recession.
Early 2000s recession: Date: Mar 2001–Nov 2001, Duration: 8 months, GDP decline: −0.3%.
Major Causes: The collapse of the speculative dot-com bubble, a fall in business outlays and investments, and the September 11th attacks, brought the decade of growth to an end.
Great Recession: Date: Dec 2007–June 2009, Duration: 1 year 6 months, GDP decline: −5.1%.
Major Causes: 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.
All we know about the 2020 recession is what caused it (Pandemic COVID-19), how long will it last and how much will be the decline in the GDP is still unknown. However, let’s leave that to the future and concentrate on how many lives we can save today. “A simple fact that is hard to learn is that the time to save money is when you have some” — Joe Moore
