A History of Recessions


Economics is known as an imprecise science and one might need look no further than the business of calling recessions to see that.

Unlike the weather, recessions arrive before you know it and depart under the same circumstances.

The National Bureau of Economic Research, or NBER, is considered the official arbiter of recessions, but it doesn't define a recessions by the school book measure of two or more consecutive quarters of economic contraction as measured by GDP. It states that "a recession is a significant decline in economic activity spread across the economy, lasting more than a few months.

The last recession ran from March 2001 through November 2001, according to the NBER. (See chart)

When 9/11 hit, many economists feared the event would throw the U.S. economy into recession. In fact, it already was. Then Fed Chairman Alan Greenspan's enormous efforts to stoke the economy -- including interest rate cuts -- were later determined to have made the recession shallower and shorter. History later showed that the recession officially ended in December of 2001.

Indeed, until the last 25 years, recessions were a common economic event, often occurring every few years. Three of the last four recessions have been unusually short by historical stands, averaging seven months. The other (1981-1982) lasted 16 months and was the longest since WWII. Two of them were caused by so-called "oil shocks".

"I think the economy itself has changed," says Richard Sylla, a professor at New York University's Stern School of Business, who specializes in economic and financial history." We're much more of a service economy. It used to be easier to forecast when we were more manufacturing based."

If at this point you are doubting the credentials of the NBER, it is worth noting that 16 of the 31 American Nobel Prize winners in economics and half a dozen former heads of the Council of Economic Advisers have been researchers at the NBER. The later category includes none other than Fed Chairman Ben Bernanke, who chaired the CEA in 2005-2006 and was one director of the monetary economics program at the NBER.

Recessions of the 20th Century

Sept. 1902-Aug. 1904 23
May 1907-June 1908 13
Jan. 1910-Jan. 1912 24
Jan. 1913-Dec. 1914 23
Aug. 1918-March 1919 7
Jan. 1920-July 1921 18
May 1923-July 1924 14
Oct. 1926-Nov. 1927 13
Aug. 1929-March 1933 43
May 1937-June 1938 13
Feb. 1945-Oct. 1945 8
Nov. 1948-Oct. 1949 11
July 1953-May 1954 10
Aug. 1957-April 1958 8
April 1960-Feb. 1961 10
Dec. 1969-Nov. 1970 11
Nov. 1973-March 1975 16
Jan. 1980-July 1980 6
July 1981-Nov. 1982 16
July 1990-March 1991 8
March 2001-Nov. 2001 8
source: NBER