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 is a lagging economic indicator. Most employers wait until they are sure the economy is back on its feet again before hiring permanent employees. There have been 19 noteworthy recessions throughout U.S. history.
Earlier 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 the support for a national central bank.
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.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 1879.1857: Embezzlement at the Ohio Life Insurance and Trust Company’s New York branch triggered a panic. When a ship carrying gold en route to New York sank, investors lost faith in paper money. Businesses couldn’t make their payrolls, and commerce ground to a halt.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.
20th-Century Recessions
There were 12 recessions in the 20th century. The Great Depression was technically two of the nation’s worst recessions 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 had lower reserves. Congress created the Federal Reserve System to prevent future collapses.
1929–38 (The Great Depression)
The biggest economic crisis in U.S. history was two closely related recessions. The first downturn was from August 1929 to March 1933, with a record 12.9% contraction in 1932. 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. The New Deal ended the first recession, boosting growth by 10.8%. The second recession ended when the drought did, and the government increased spending for World War II.
1945
This recession lasted eight months, from February to October. It was a natural result of the demobilization from World War II.
1949
This 11-month recession began in November 1948 and lasted until October 1949, when unemployment peaked at 7.9%. It was caused by the Fed raising interest rates too quickly.
1957
In this recession, which took place from August 1957 to April 1958, GDP fell 4.1% in Q4 1957, then contracted to a low of 10.0% in Q1 1958. Unemployment didn’t reach its peak of 7.5% until July 1958. The Fed’s contractionary monetary policy caused this economic slowdown.
1960
Starting in April 1960, this recession lasted 10 months until February 1961. GDP was -2.1% in Q2 1960, rose by 2.0% in Q3, but was down by 5.0% in Q4. Unemployment reached a peak of 7.1% in May 1961.
1970
This recession was relatively mild, lasting 11 months—from December 1969 to November 1970. Unemployment peaked at 6.1% in December 1970. The economy contracted by 1.9% in Q4 1969 and by 0.6% in Q1 1970. GDP rose by 0.6% in Q2 1970 and 3.7% in Q3 but fell by 4.2% in Q4. The economy recovered in Q1 1971, increasing by 11.3%.
1973-75
This recession lasted 16 months, from November 1973 to March 1975. The OPEC oil embargo is blamed for quadrupling oil prices, but actions taken by President Richard Nixon also contributed to the recession. First, Nixon instituted wage-price controls. They kept prices too high, reducing demand. Wage controls made salaries too high and forced businesses to lay off workers. Second, Nixon took the United States off the gold standard in response to a run on the gold held at Fort Knox, which led to inflation. The price of gold skyrocketed while the dollar’s value plummeted. The result was stagflation and five quarters of negative GDP growth: 1973 Q3, -2.1%; 1974 Q1, -3.4%; Q3, -3.7%; Q4, -1.5%; and 1975 Q1, -4.8%. Unemployment reached a peak of 9.0% in May 1975, two months after the recession ended.
1980-82
The economy suffered a double whammy of two recessions in this period. There was one during the first six months of 1980. The second lasted 16 months, from July 1981 to November 1982. The Fed caused this recession by raising interest rates to combat inflation. That reduced business spending. The Iranian oil embargo aggravated economic conditions by reducing U.S. oil supplies, which drove prices up. GDP was negative for six of the 12 quarters. The worst was Q2 1980 at -8.0%. Unemployment rose to 10.8% in November and December 1982. It was above 10% for 10 months.
21st-Century Recessions
In its first decade, the 21st century experienced three recessions. Each was worse than the one before it, but for different reasons.
2001
The 2001 recession lasted eight months, from March to November. It was caused by a boom and subsequent bust in dot-com businesses. The Y2K scare had partially created the boom in 2000. Companies bought billions of dollars worth of new software because they were afraid the old systems weren’t designed to transition from the 1900s to the 2000s. Many dot-com businesses were significantly overvalued and failed. The 9/11 attack worsened the recession. The economy contracted in two quarters: Q1 by -1.3% and Q3 by -1.6%. Unemployment continued rising until it peaked at 6.3% in June 2003.
2008–09
The Great Recession lasted from December 2007 to June 2009, the longest contraction since the Great Depression. The subprime mortgage crisis triggered a global bank credit crisis in 2007. By 2008, the damage had spread to the general economy through the widespread use of derivatives. GDP in 2008 shrank in three quarters, including an 8.5% drop in Q4. The unemployment rate rose to 10% in October 2009, lagging behind the recession that caused it.
2020 Recession
The 2020 recession was the worst since the Great Depression. In March 2020, the Federal Reserve lowered the fed funds rate to basically 0%. Congress issued billions of dollars in aid. The U.S. economy contracted a record 31.2% in the second quarter after falling 5.1% in the previous quarter. In April 2020, the U.S. economy lost an astonishing 20.5 million jobs, sending the unemployment rate skyrocketing to 14.7%. It remained in the double digits until August. Uncertainty over the pandemic’s impact also caused the 2020 stock market crash. Although the economy grew 33.8% in the third quarter, it was not enough to make up for earlier losses. Correction - Oct. 19, 2022: This article has been updated to correct the Fed’s policy on the fed funds rate after it lowered it to basically 0% in 2020. The average recession before 2007 lasted about 11 months. The Great Recession lasted 18 months. The 2020 recession lasted just two months—the shortest on record.
