A Recap of the Previous RecessionsBy
Did you know that the Great Depression has been followed by many other recessions? It’s astonishing for sure to understand how terrible these have been and the impact they had on the economy.
Historically recession has been described as a decline in GDP consecutively for two quarters. A fairly more modern version of the definition states this as a significant decline in economic that lasts more than a few months.
Let’s dig a little deeper understanding, what caused these recessions, their duration, how they affected the unemployment rates and the growth of the economy.
The following are some of the significant financial crisis that made it to the history:
The Union Recession
Duration- February 1945 - October 1945
The union recession which continued for nine months caused an 11% decline in the GDP and a 1.9% unemployment rate. The end of World War II and the withdrawal of military forces, along with the shift of the market to civilian production caused this. Transsion of the market situations marked this phase. The production market shifted its focus from the war to the civilians. Focus on rejoining workforces led to minimum wages and shortage of the credit ultimately disturbing the GDP.
The Post-War Recession
Duration- November 1948 - October 1949
This recession continued for 11 months that led to a 1.1% GDP decline along with a 5.9% unemployment rate. The returning of a large number of people to join the workforce competing with existing workers led to the rise of unemployment rates. The negligence of the government about bothering unemployment rates further damaged the rate.
The Post-Korean War Recession
Duration- July 1953 - May 1954
The 10 months long Post-Korean war recession caused a 2.2% decline in GDP and a 2.9% unemployment rate. It was the lowest unemployment rate that was recorded post world war 11. The dramatic change in the interest rates due to the Korean war along with the inflation collective led to this crisis.
The Eisenhower Recession
Duration- August 1957 - April 1958
The Eisenhower recession lasted eight months and caused GDP to decrease by 3.3% and unemployment rates accounted for 6.2%. The causes for this scenario are said to be the government’s decision to regulate monetary policy strictly to cease inflation. But this ultimately led to causing the economic decline.
The Iran Crisis Recession
Duration- July 1981 - November 1982
This is one of the longest recession that continued for 16 months and caused the GDP to shrink by 3.6% and the unemployment rate was 10.8%. This was caused when Iran was exporting oil inconsistently in less quantity causing the rise of the prices. The U.S. government’s counteraction of implementing a tighter monetary policy to control inflation had a cascading effect in leading to the economic crash.
The 9/11 Recession
Duration- March 2001 - November 2001
This recession was eight months long and caused a GDP decline of 0.3% and the unemployment rate was 5.5. As the name suggests this was a result of the 9/11 attacks accompanied by some other issues like the collapse of Dotcom. But this scenario didn’t last long and caused only minor damage to the GDP.
The Great Recession
Duration- December 2007 – June 2009
This recession caused an alarming 5.6% decline of the GDP along with a 10% unemployment rate. This also referred to as the 2008 Recession is believed to be caused by the subprime mortgage crisis. The subprime mortgage crisis is a term used to refer to the home loans issued to high-risk profiles. To sum up, the Federal Reserve's failure in regulating the financial sector has led to the ultimate crash.
Every economic crash was caused by some of the other prominent or even a minor economic change. Few lasted some months, few continued for more than a year. The impact of these crises varied but they had made it to the history of the world because of the consequences they caused in the world. With the onset of the pandemic Coronavirus, the fears of another looming recession are intensifying. The upcoming recession is predicted to be the most severe one after the great depression itself. Why the world is struggling right now for a number of reasons the upcoming crisis can make the situation worst. Be prepared because you never know what’s about to happen.