With the U.S. economy on the verge of another significant recession as a result of the global coronavirus pandemic, social media users of all ages are going online to argue about which generation has suffered more at the hand of past economic downturns.
Members of Generation Z (a group often defined as having been born after 1997) and some younger millennials (a group that ranges in age from about 23 to 39, overall) are on the verge of experiencing their first recession as members of the workforce. Meanwhile, many older millennials have the unfortunate distinction of having entered the workforce amid the aftermath of the 2008 financial crisis, only to face yet another potentially historic slump roughly a decade later.
Of course, Generation X-ers (those born between 1965 and 1980) are quick to point out that they've also suffered through the same financial crises as their younger colleagues, plus even more, including the dot-com bubble bursting at the turn of the century. (Though, an analysis by the St. Louis Federal Reserve shows that Gen X-ers, on average, had twice the total assets at the time of the 2008 crisis as does the average millennial who now finds themself on the precipice of another recession.)
In fact, recessions are fairly common occurrences and the odds are that every generation is likely to live through their fair share of them. (For instance, some Baby Boomers, who were born starting in the mid-1940s, 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.S. economy set a record by starting and ending a decade without a recession for the first time ever. Since 1900, the average recession has lasted about 15 months.
Before 2020, the U.S. economy had entered into a recession a total of 13 times since the Great Depression, which ended in 1933. Here is a look at every recession that's hit the U.S. economy since the 1930s, according to data from the National Bureau of Economic Research.
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.S. GDP to decline for at least the first two quarters of 2020. 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 (126 months, as of December).
Roughly 16 million Americans filed for unemployment benefits in the past three weeks, which equals about 10% of the overall workforce. Goldman Sachs is projecting that U.S. unemployment could hit 15% by mid-year, and that the second quarter of 2020 could see a record GDP decline of 34%.
The country's GDP fell 4.3% and the unemployment rate would eventually reach 10%. The recession lasted 18 months and required massive government stimulus to turn the economy around, including a $700 billion bailout of the financial industry, along with insurance and automobile companies, and another government stimulus package worth more than $800 billion.
It occurred on the tail end of a subprime mortgage crisis (where the U.S. foreclosure rate jumped 79% in 2007), which crashed the U.S. housing market and sunk home prices. 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 2008, leading to a stock market crash that saw the major indexes lose more than half of their value over the course of the crisis.
The dot-com bubble burst in 2000, when an over-inflated Nasdaq lost more than 75% of its value and wiped out a generation of tech investors. Those losses left the stock market in a vulnerable place that got worse in the fall of 2001, when the devastation of the September 11, 2001 terrorist attacks and a series of major accounting scandals at corporations like Enron and Swissair spurred a stock market crash. The S&P 500 also lost 43% of its value between 2000 and 2002, and the Nasdaq did not return to its 2000 peak value until 2015.
The resulting recession was relatively short, at just eight months, and also shallow, as GDP dipped only 0.6% and unemployment reached 5.5%.
A mild recession kicked off in 1990, 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 1990 (followed by U.S. involvement and the Gulf War) and caused global oil prices to more than double.
The recession lasted just eight months, with GDP declining 1.1% during that period and unemployment reaching roughly 7%.
In 1981, having emerged from a recession just a year before (the early '80s are described as having a "double dip recession because there were two so close together), the Federal Reserve tried to tame rising inflation with stricter monetary policy that raised interest rates and slowed the economy. Those policies managed to reduce inflation to around 4% by 1983, but the cost was a 16-month recession that saw GDP drop by around 3% and unemployment spiked to 10.8%.
The recession was exacerbated by another global energy crisis as a new Iranian regime decreased its oil output, raising global oil prices. The recovery that followed, which resulted in an economic expansion that lasted the rest of the decade, is often attributed to varying factors, including President Ronald Reagan's tax cuts and increased defense spending as well as the Fed's eventual moves to lower interest rates.
Inflation rates rose throughout the late-1970s, reaching double-digit levels in 1979 and peaking at 22% in 1980. As a result, the Federal Reserve raised interest rates to stop the rising inflation, which slowed down the economy (GDP dropped over 2%) and caused unemployment to spike to 7.8%. The Fed lowered interest rates again in mid-1980, giving the economy a chance to rebound and ending a brief, six-month recession.
In the fall of 1973, the Organization of the Petroleum Exporting Countries, or OPEC, put an embargo on oil imports from multiple countries, including the U.S., over their support of Israel's military. Oil prices roughly quadrupled as a result, putting a major crunch on the economy as gas prices soared for consumers, reducing their spending on other items. The economy was further hurt by President Richard Nixon's attempts to reduce inflation with price and wage freezes, while a 1973 global stock market crash resulted in a nearly two-year bear market that saw the Dow Jones lose 45% of its value.
The resulting recession lasted for 16 months (it even outlasted the oil embargo itself, which OPEC lifted in 1974) and saw GDP decline by 3.4% while unemployment climbed from 4.8% to nearly 9%.
The 1960s essentially began and ended with bookending recessions, but in between them was a long economic expansion that saw inflation rise by the end of the decade. As a result, the Federal Reserve tightened its monetary policy, raising rates, and the Nixon Administration moved to cut government spending.
The "mild recession" that ensued caused unemployment to peak at around 6% while the GDP dropped less than 1% before the Fed eased its monetary policies to restart economic growth in 1970.
Even though two previous recessions in the '50s stemmed from tighter monetary policies giving rise to interest rates, the Federal Reserve began slowly raising interest rates following the end of the previous recession in 1958, leading to another short-lived recession at the start of the 1960s.
The 10-month recession saw the GDP drop by nearly 2% and unemployment peaked at 6.9%, while President John F. Kennedy spurred a rebound in 1961 with stimulus spending that included tax cuts and expanded unemployment and Social Security benefits.
This recession in the late-1950s lasted eight months. GDP fell by 3.7% and unemployment peaked at 7.4% as the government's tighter monetary policy in the mid-1950s raised interest rates in an effort to curb inflation. As a result consumer prices also continued to rise, which led to a decline in spending.
Meanwhile, a global recession (which also happened to coincide with the 1957 Asian flu pandemic that killed 1.1 million people worldwide) further hurt the U.S. economy as the country's exports declined by more than $4 billion.
The Dwight Eisenhower Administration acted aggressively to spur an economic rebound, including increasing government spending on construction projects and putting more money into the nation's interstate system after previously passing the landmark Federal Aid Highway Act in 1956.
As with previous post-war recessions, this downturn was spurred by a shift in government spending after the end of the Korean War (which lasted from 1950 to 1953). The country's GDP dropped by 2.2% and unemployment peaked at roughly 6%, as the government wound down security spending following the war and the U.S. Federal Reserve tightened monetary policy to curb inflation (which includes increasing interest rates). However, spiking interest rates hurt consumer confidence in the economy and decreased consumer demand. The Fed eased its policies in 1954, allowing the economy to rebound after a 10-month recession.
After the war there was an eight-month recession (see below), but the economic challenges stemming from the end of World War II again caught up with the U.S. economy during the last stretch of the 1940s. But this 11-month recession — in which the country's GDP dropped by less than 2% — was considered "very mild" by economists, who attribute the downturn in part to consumer demand leveling off after previously spiking when wartime rationing efforts ceased.
Economists also point to a decline in fixed investments, while the influx of veterans returning from war and competing for limited civilian jobs helped the unemployment rate climb as high as 7.9%, according to the U.S. Bureau of Labor Statistics.
This downturn was caused primarily by a significant drop in government spending and GDP (which fell 11%) as the U.S. pivoted from a wartime economy built around manufacturing supplies for the World War II effort to a peacetime economy focused on creating civilian jobs for returning veterans.
The recession lasted only eight months as the country shifted manufacturing priorities, though, and the unemployment rate topped out at just 1.9%.
A year later, Congress passed the Employment Act of 1946, which put responsibility on the federal government to maintain stable levels of employment and price inflation.
This recession was essentially a 13-month pause in the nation's recovery from the Great Depression and modern economists have called the episode a "cautionary tale." In 1937, President Franklin D. Roosevelt cut government spending at a time when the country's economic recovery was still fragile enough to be derailed. As a result, unemployment jumped from roughly 14% to nearly 20% and the real GDP fell by 10%.
The following year, Roosevelt signed a $3.75 billion spending bill that restarted the economic recovery.
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