A recession is defined as a contraction in economic growth lasting two quarters or more as measured by the gross domestic product (GDP). Starting with an eight-month slump in 1945, the U.S. economy has weathered 12 different recessions since World War II and up until the COVID-19 pandemic, which ended the longest period of economic expansion on record.
On average, America’s post-war recessions have lasted only 10 months, while periods of expansion have lasted 57 months.
1. February to October 1945: End of WWII
World War II was an economic boon for the U.S. economy as the government infused tens of billions of dollars into manufacturing and other industries to meet wartime needs. But with the surrender of both Germany and Japan in 1945, military contracts were slashed and soldiers started coming home, competing with civilians for jobs.
As government spending dried up, the economy dipped into a serious recession with GDP contracting by a whopping 11 percent. But the manufacturing sector adapted to peacetime conditions faster than expected and the economy righted itself in a tidy eight months. At its worst, the unemployment rate was only 1.9 percent.
2. November 1948 to October 1949: Post-War Consumer Spending Slows
When wartime rations and restrictions were lifted after WWII, American consumers rushed to catch up on years of pent-up purchases. From 1945 to 1949, American households bought 20 million refrigerators, 21.4 million cars, and 5.5 million stoves.
When the consumer spending boom began to level off in 1948, it triggered a “mild” 11-month recession in which GDP shrunk by only 2 percent. Unemployment was up considerably, though, with all former GIs back in the job market. At its peak, unemployment reached 7.9 percent in October 1949.
3. July 1953 to May 1954: Post-Korean War Recession
This relatively short and mild recession followed the script of the post-WWII recession as heavy government military spending dried up after the end of the Korean War. During a 10-month contraction, GDP lost 2.2 percent and unemployment peaked around 6 percent.
The post-Korean War recession was exacerbated by the Federal Reserve’s monetary policy. As would happen in many future recessions, the Fed raised interest rates to combat high inflation caused by an influx of dollars into the wartime economy. The higher interest rates had the intended effect of slowing inflation, but also lowered confidence in the economy and undercut consumer demand.
In fact, one of the main reasons that the recession was so short was because the Fed decided to lower interest rates back down in 1953.
4. August 1957 to April 1958: Asian Flu Pandemic
In 1957, an Asian Flu pandemic spread from Hong Kong across India and into Europe and the United States, sickening untold numbers and ultimately killing more than a million people worldwide. The illness also triggered a global recession that cut U.S. exports by more than $4 billion.
Again, the economic problems were compounded by the Fed raising interest rates to slow inflation, which had been on the rise throughout the 1950s. Consumer spending flagged and the U.S. economy sunk into an eight-month recession during which GDP shrank by 3.3 percent and unemployment rose to 6.2 percent.
Dwight D. Eisenhower is credited with ending the short recession by boosting government spending on highway construction and other public infrastructure projects approved by the 1956 Federal Aid Highway Act.
5. April 1960 to February 1961: The Recession that Cost Nixon an Election
Just two years later, Richard M. Nixon was vice president when the nation sunk into yet another recession. Nixon blamed the economic slump for his loss to John F. Kennedy in the 1960 presidential election.
There were two major causes of this 10-month recession, during which GDP declined 2.4 percent and unemployment reached nearly 7 percent. The first was what economists call a “rolling adjustment” in several major industries, most notable automobiles. Consumers started buying more compact foreign cars and U.S. carmakers had to slash inventory and adjust to changing tastes, which meant a temporary reduction in profits.
The second cause was the Fed again, which raised interest rates fast on the heels of the previous recession in an ongoing effort to rein in inflation.
Not only did Nixon get the blame for starting the recession, but JFK took credit for ending it with a round of stimulus spending in 1961 and an expansion of Social Security and unemployment benefits.
6. December 1969 to November 1970: Putting the Brakes on 1960s Inflation:
This extremely mild recession was another course correction engineered by the Fed under the Nixon administration. After the previous recession, the U.S. economy went on a decade-long expansion that saw inflation rise to over 5 percent in 1969.
In response, the Fed once again raised interest rates, which had the intended consequence of cooling the hot 1960s economy while only reducing GDP by 0.8 percent over an 11-month recession. Unemployment rose to 5.5 percent over the same period. When the Fed lowered rates again in 1970, the economy cranked back into growth mode.
7. November 1973 to March 1975: The Oil Embargo
This recession marked the longest economic slump since the Great Depression and was caused by a perfect storm of bad economic news.
First, there was the Oil Embargo of 1973, imposed by the Organization of the Petroleum Exporting Countries (OPEC). With the oil supply restricted, gas prices soared and Americans cut spending elsewhere.
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At the same time, Nixon tried to reduce inflation by instituting price and wage freezes in major U.S. industries. Unfortunately, companies were forced to lay off workers in order to afford the new salaries, which still weren’t high enough for consumers to pay the new fixed prices.
The result was “stagflation,” a stagnant economy with high inflation and low consumer demand, and a recession that spanned five consecutive negative-growth quarters. In all, the 16-month recession saw a 3.4 percent reduction in GDP and a near doubling of the unemployment rate to 8.8 percent.
The Fed had no choice but to lower interest rates to end the recession, but that set the stage for the truly runaway inflation of the late 1970s.
8. January to July 1980: Second Energy Crisis and Inflation Recession
Oil prices skyrocketed again in 1979 caused by disruptions to the oil supply during the Iranian Revolution and increased global oil demand. This led to high prices and long lines at the gas pump in the United States.
Meanwhile, inflation had grown to a staggering 13.5 percent and the Fed had no choice but to raise interest rates, which put the brakes on the booming late 1970s economy. The result was a tie for the shortest post-WWII recession—just six months start to finish—in which GDP declined only 1.1 percent but unemployment ratcheted up to 7.8 percent.
9. July 1981 to November 1982: Double Dip Recession
This far more painful recession came close on the heels of the short 1980 recession, introducing Americans to the phrase “double-dip recession.”
For the third time in a decade, one of the recessionary triggers was an oil crisis. The Iranian Revolution was over, but the new regime under Ayatollah Khomeini continued to export oil inconsistently and at lower levels, keeping gas prices high.
At the same time, the Fed’s timid interest rates hikes in 1980 weren’t enough to slow inflation, so Fed chief Paul Volcker pushed interest rates to new heights—21.5 percent in 1982. The sky-high rate pulled inflation down, but took its toll on the economy, which shrunk by 3.6 percent during the 16-month recession and saw unemployment peak at over 10 percent.
This long and deep recession finally ended following a combination of tax cuts and defense spending under Ronald Reagan.
10. July 1990 to March 1991: S&L Crisis and Gulf War Recession
A host of factors led to the economic slowdown of the early 1990s. One was the failure of thousands of Savings & Loan institutions in the late 1980s which hit the mortgage lending market particularly hard. Fewer mortgages meant record low levels new construction, which had far-reaching effects across the economy.
While that may have been enough to send the economy into recession, Saddam Hussein of Iraq invaded neighboring Kuwait, a major oil producer. The ensuing Gulf War caused oil prices to more than double. Adding to the economic woes was the October 1989 “mini-crash” of the stock market.
The result was an eight-month recession that saw GDP decline by 1.5 percent and unemployment peak at 6.8 percent. Even when the recession officially ended in 1991, it was followed by several quarters of very slow growth.
11. March to November 2001: The Dot-Com Crash and 9/11
Irrational exuberance is blamed for the stock market bubble that formed around internet startups in the late 1990s and 2000. Investors pumped money into unproven businesses, artificially inflating their values to unsustainable levels. When the dot-com bubble finally burst in 2001, the tech-heavy Nasdaq lost 75 percent of its value and hordes of investors went belly up.
While the tech sector took a devastating hit, the rest of the economy stumbled along until the September 11th terrorist attacks knocked it down for good. The early 2000s were also marked by high-profile corporate accounting scandals at Enron and poor stock market returns. The S&P 500 lost 43 percent of its value from 2000 to 2002.
Given how much the dot-com crash impacted a generation of investors, the 2001 recession was relatively fast and shallow, with GDP down only 0.3 percent overall and unemployment peaking at 5.5 percent.
The economy was able to pull out of the 2001 recession on the strength of the housing sector, which experienced growth even during the recession thanks to low interest rates.
12. December 2007 to June 2009: The Great Recession
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The longest and most calamitous economic downturn since the Great Depression, the Great Recession was part of a global financial meltdown triggered by the collapse of the U.S. housing bubble.
The Great Recession was the result of a financial house of cards built on the subprime mortgage market. Large financial institutions invested heavily in mortgage-backed securities. When homeowners defaulted on those high-risk mortgages, not only did they lose their homes, but huge investment banks like Bear Stearns and Lehman Brothers teetered on the verge of collapse.
The dual housing banking crises sent shockwaves through the stock market, and major indices like the S&P 500 and Dow Jones Industrial Average lost half of their value, gutting the retirement accounts of millions of Americans.
During the agonizing 18-month recession, unemployment reached as high as 10 percent and GDP shrunk by a whopping 4.3 percent. The economy only turned around after massive government stimulus spending (more than $1.5 trillion) to prop up the failing banks and inject capital into the shell-shocked economy.