Brief History of Recessions

Harvard Business Publishing ^ | 11/19/08

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The anxiety we feel about rising prices, plummeting home values and a weak dollar is real. But perhaps we should take comfort in the fact that, historically, recessions are relatively short and they're usually followed by long periods of prosperity.

That's the core message of this interactive chart tracking the past 60 years of U.S. business cycles, as determined by the National Bureau of Economic Research's Business Cycle Dating Committee. Imagine seven economists discussing what small percentage changes in real income and wholesale production mean, and you've got a sense of the Business Cycle Dating Committee. These seven people are the somewhat-official arbiters of recessions.

They do not define a recession as consecutive quarters of negative GDP growth, which is a commonly held belief. In fact, the NBER's procedure for declaring a recession is far more intricate and elastic. "There is no fixed rule about which other measures [besides real GDP] contribute information to the process," according to the group's official recession dating procedure document.

Some factors that fueled recessions in the past are familiar (inflation), while others are unique to their era (the Edsel). Interact with the chart below to learn more about each period of growth and each downturn. And let us know what you think.

[null and void]

Nice interactive graphic at the source

[atomicweeder]

Except that we have passed from being a debtor nation, to being a debtor nation in danger of default.

There are two major things that need to happen to save America:

- China's currency is give a true valuation
- US becomes energy independent

Until those things happen, US will be buying more than it sells and fall further into debt.

[SFR]

I think 60 years is way too short to draw this conclusion. For the first 20 years we were the only economy cooking along. For the last 40 we have faced much more competition from Japan, Germany, and now China. This is a different millennium.

[arthurus]

China’s currency is irrelevant. If we were to establish a believably stable dollar with no fluctuations, no inflation, all other trade and monetary problems would sort themselves out to our benefit within the confines of our tax system. Were we also to drastically reduce or eliminate taxes on business and investment our economy would go into hyperdrive from whatever level at which those policies were instituted. And, incidentally, revenues to the government would soar, unfortunately.

[GreaterSwiss]

Notice they skip the 30s

[reed13]

This is at least the 4th recession in my lifetime...70s hurt, but I was young enough that I didn’t know much better. Even with that I can remember that it was much more painful than any of the others since. This one feels all together different than the last few. I’m not a chicken little, but there are certainly enough reasons to believe that it will be worse than the 70s.

[VOA]

bump