For more information, see the FAQs at the end of this memo, and also see http: Files containing the data and figures is available from that page as well. Suppose that the current weakness of the economy continues, contrary to current forecasts.
How will the NBER decide about turning points? The first step will be to determine if the period of weakness that began in late amounts to a recession. In this determination, we would refer to our standard criteria of depth, duration, and dispersion. The definition of a recession is stated in the third paragraph of this memo.
The second step would be to determine if the recession starting in late was a continuation of the recession that we have already determined began in March We would decide in favor of a single, longer recession if we determined that economic activity in the period from March through late never surpassed its peak in March Here, we would have to reconcile the conflicting behavior of output and employment.
Output surpassed its previous peak in late , while employment rose only slightly from its lowest level of April to the highest level it reached in , in August. At that time, employment was still 1. The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dating procedure?
Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them. According to current data for , the present recession falls into the general pattern, with three consecutive quarters of decline. Our procedure differs from the two-quarter rule in a number of ways. First, we use monthly indicators to arrive at a monthly chronology. Second, we use indicators subject to much less frequent revision. Third, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in activity.
Some observers, however, cite April as the start of the recession, reasoning that if the peak ended in March, then the recession began in April. The exact peak occurred sometime in March. For the rest of the days in March, the economy was in recession. So the expansion ended and the recession began in March. Isn't a recession a period of diminished economic activity? It's more accurate to say that a recession-the way we use the word-is a period of diminishing activity rather than diminished activity.
We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when the economy is contracting. The following period is an expansion. Economic activity is below normal or diminished for some part of the recession and for some part of the following expansion as well. Some call the period of diminished activity a slump. Following the precedents established in many decades of maintaining its business cycle chronology, the NBER considers employment, production, sales, and real income.
When special factors-such as unusual productivity growth and favorable shifts in the terms of trade-make income and production-based measures move differently from those based on employment, we balance the two types of evidence. You emphasize the payroll survey as a source for data on economy-wide employment. What about the household survey?
Although the household survey is a large, well-designed probability sample of the U. The two sources agree reasonably closely about the movement of employment in this recession. A bulge in jobless claims would appear to forecast declining employment, but we don't use forecasts and the claims numbers have a lot of noise. Unemployment is generally a lagging indicator. Its rise from a very low level to date is consistent with the employment data. How do structural changes in the economy in the s affect the NBER's method for dating business cycles? The Bureau notes that industrial production measures a declining part of the economy.
What other substitutes for output bear watching, particularly with regard to service-sector activity? Economy-wide employment and real personal income are the most important monthly indicators. At a quarterly frequency, real GDP is informative. Another interesting monthly indicator is aggregate hours of work. Regarding movements of income as an indicator of recessions, isn't it true that real income has not bfallen substantially during five of the past nine recessions? Is the NBER committee considering re-dating the beginning of the recession, based on the revised GDP data which seem to indicate that the peak of the last cycle was reached before your current date?
Has the committee ever before changed a cycle date based on new information? There has been a discussion, but it is not active currently.
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To our knowledge, there has never been a change, and definitely not since when the current chairman was appointed. The NBER first compiled a chronology in the early s, soon after the founding of the Bureau in Robert Hall has chaired the committee since its inception. The President of the NBER appoints the members, who include directors of the macro-related programs of the NBER plus other members with specialties in business-cycle research.
The panic of , which lasted until , ended the business boom that followed the American Revolution. The causes of the crisis lay in the overexpansion and debts incurred after the victory at Yorktown, a postwar deflation, competition in the manufacturing sector from Britain, and lack of adequate credit and a sound currency.
The downturn was exacerbated by the absence of any significant interstate trade. Other factors were the British refusal to conclude a commercial treaty, and actual and pending defaults among debtor groups. The panic among business and propertied groups led to the demand for a stronger federal government.
Loss of confidence in copper coins due to debasement and counterfeiting led to commercial freeze up that halted the economy of several northern States and was not alleviated until the introduction of new paper money to restore confidence. Its causes included the extension of credit and excessive speculation. The panic that was largely solved by providing banks the necessary funds to make open market purchases. Just as a land speculation bubble was bursting, deflation from the Bank of England which was facing insolvency because of the cost of Great Britain's involvement in the French Revolutionary Wars crossed to North America and disrupted commercial and real estate markets in the United States and the Caribbean , and caused a major financial panic.
A boom of war-time activity led to a decline after the Peace of Amiens ended the war between the United Kingdom and France.
List of recessions in the United States
Commodity prices fell dramatically. Trade was disrupted by pirates, leading to the First Barbary War. Along with trade restrictions imposed by the British, shipping-related industries were hard hit. The Federalists fought the embargo and allowed smuggling to take place in New England. Trade volumes, commodity prices and securities prices all began to fall. Macon's Bill Number 2 ended the embargoes in May , and a recovery started. The United States entered a brief recession at the beginning of The decline was brief primarily because the United States soon increased production to fight the War of , which began June 18, Shortly after the war ended on March 23, , the United States entered a period of financial panic as bank notes rapidly depreciated because of inflation following the war.
After only a mild recovery following the lengthy —21 depression, commodity prices hit a peak in March and began to fall. Many businesses failed, unemployment rose and an increase in imports worsened the trade balance. The Panic of , a stock crash following a bubble of speculative investments in Latin America led to a decline in business activity in the United States and England. The recession coincided with a major panic, the date of which may be more easily determined than general cycle changes associated with other recessions.
In , England forbade the United States to trade with English colonies, and in , the United States adopted a counter-prohibition. Trade declined, just as credit became tight for manufacturers in New England. The United States' economy declined moderately in — News accounts of the time confirm the slowdown. The subsequent expansion was driven by land speculation. A sharp downturn in the American economy was caused by bank failures, lack of confidence in the paper currency , tightening of English Credit, crop failures and Jacksonian policy.
In the South, the cotton market completely collapsed. This was one of the longest and deepest depressions of the 19th century. It was a period of pronounced deflation and massive default on debt. The Cleveland Trust Company Index showed the economy spent 68 months below its trend and only 9 months above it. The Index declined This recession was mild enough that it may have only been a slowdown in the growth cycle.
One theory holds that this would have been a recession, except the United States began to gear up for the Mexican—American War , which began April 25, The Cleveland Trust Company Index declined It is associated with a financial crisis in Great Britain. Interest rates rose in this period, contributing to a decrease in railroad investment. Security prices fell during this period.
With the exception of falling business investment there is little evidence of contraction in this period. Over 5, businesses failed within the first year of the Panic, and unemployment was accompanied by protest meetings in urban areas. This is the earliest recession to which the NBER assigns specific months rather than years for the peak and trough. There was a recession before the American Civil War , which began April 12, Zarnowitz says the data generally show a contraction occurred in this period, but it was quite mild.
The American Civil War ended in April , and the country entered a lengthy period of general deflation that lasted until The United States occasionally experienced periods of recession during the Reconstruction era. Production increased in the years following the Civil War, but the country still had financial difficulties. A few years after the Civil War, a short recession occurred. It was unusual since it came amid a period when railroad investment was greatly accelerating, even producing the First Transcontinental Railroad.
The railroads built in this period opened up the interior of the country, giving birth to the Farmers' movement. The recession may be explained partly by ongoing financial difficulties following the war, which discouraged businesses from building up inventories. Panic of and the Long Depression. The Coinage Act of also contributed by immediately depressing the price of silver, which hurt North American mining interests. This is the longest period of economic contraction recognized by the NBER.
The Long Depression is sometimes held to be the entire period from — Like the Long Depression that preceded it, the recession of —85 was more of a price depression than a production depression. From to , there had been a boom in railroad construction which came to an end, resulting in a decline in both railroad construction and in related industries, particularly iron and steel.
Investments in railroads and buildings weakened during this period. This slowdown was so mild that it is not always considered a recession.
Contemporary accounts apparently indicate it was considered a slight recession. Although shorter than the recession in —88 and still modest, a slowdown in —91 was somewhat more pronounced than the preceding recession. International monetary disturbances are blamed for this recession, such as the Panic of in the United Kingdom. Failure of the United States Reading Railroad and withdrawal of European investment led to a stock market and banking collapse. This Panic was also precipitated in part by a run on the gold supply.
The Treasury had to issue bonds to purchase enough gold. Profits, investment and income all fell, leading to political instability, the height of the U. The period of —97 is seen as a generally depressed cycle that had a short spurt of growth in the middle, following the Panic of Production shrank and deflation reigned. This was a mild recession in the period of general growth beginning after Evidence for a recession in this period does not show up in some annual data series. Though not severe, this downturn lasted for nearly two years and saw a distinct decline in the national product.
Industrial and commercial production both declined, albeit fairly modestly. A run on Knickerbocker Trust Company deposits on October 22, , set events in motion that would lead to a severe monetary contraction. The fallout from the panic led to Congress creating the Federal Reserve System. This was a mild but lengthy recession. The period was also marked by deflation. Productions and real income declined during this period and were not offset until the start of World War I increased demand.
Post-World War I recession. Severe hyperinflation in Europe took place over production in North America. This was a brief but very sharp recession and was caused by the end of wartime production, along with an influx of labor from returning troops. This, in turn, caused high unemployment. The recession began a mere 10 months after the post-World War I recession, as the economy continued working through the shift to a peacetime economy.
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The recession was short, but extremely painful. The year was the single most deflationary year in American history; production, however, did not fall as much as might be expected from the deflation. GNP may have declined between 2. From the depression of —21 until the Great Depression, an era dubbed the Roaring Twenties , the economy was generally expanding. Industrial production declined in —24, but on the whole this was a mild recession.
This was an unusual and mild recession, thought to be caused largely because Henry Ford closed production in his factories for six months to switch from production of the Model T to the Model A. Kindleberger says the period from to the start of the Great Depression is best thought of as a boom, and this minor recession just proof that the boom "was not general, uninterrupted or extensive".
Aug Mar ct Dec A banking panic and a collapse in the money supply took place in the United States that was exacerbated by international commitment to the gold standard. The economy began to recover in the mid 30s with gold inflow expanding the money supply and improving expectations but double dipped during the Recession of The ultimate recovery has been credited to monetary policy and monetary expansion.
The Recession of is only considered minor when compared to the Great Depression, but is otherwise among the worst recessions of the 20th century. Three explanations are offered as causes for the recession: The decline in government spending at the end of World War II led to an enormous drop in gross domestic product, making this technically a recession. This was the result of demobilization and the shift from a wartime to peacetime economy. The post-war years were unusual in a number of ways unemployment was never high and this era may be considered a " sui generis end-of-the-war recession".
The recession was a brief economic downturn; forecasters of the time expected much worse, perhaps influenced by the poor economy in their recent lifetimes. After a post- Korean War inflationary period, more funds were transferred to national security. In , the Federal Reserve reasserted its independence from the U. Treasury and in , the Federal Reserve changed monetary policy to be more restrictive because of fears of further inflation or of a bubble forming. Monetary policy was tightened during the two years preceding , followed by an easing of policy at the end of The budget balance resulted in a change in budget surplus of 0.
Another primarily monetary recession occurred after the Federal Reserve began raising interest rates in The government switched from deficit or 2. When the economy emerged from this short recession, it began the second-longest period of growth in NBER history. The relatively mild recession followed a lengthy expansion.
At the end of the expansion, inflation was rising, possibly a result of increased deficits. This relatively mild recession coincided with an attempt to start closing the budget deficits of the Vietnam War fiscal tightening and the Federal Reserve raising interest rates monetary tightening.
The oil crisis , a quadrupling of oil prices by OPEC , coupled with the — stock market crash led to a stagflation recession in the United States. The NBER considers a very short recession to have occurred in , followed by a short period of growth and then a deep recession. Unemployment remained relatively elevated in between recessions.
The recession began as the Federal Reserve, under Paul Volcker , raised interest rates dramatically to fight the inflation of the s. The early '80s are sometimes referred to as a " double-dip " or " W-shaped " recession. The Iranian Revolution sharply increased the price of oil around the world in , causing the energy crisis. This was caused by the new regime in power in Iran , which exported oil at inconsistent intervals and at a lower volume, forcing prices up.