Did you know that there have been several recessions in the U.S. since the Great Depression? It may come as a surprise, especially when you see these events covered in the media as one-time horrors.

What's a Recession?

A recession historically has been defined as two consecutive quarters of decline in GDP, the combined value of all the goods and services produced in the U.S. It differs from the gross national product (GNP) in that it does not include the value of goods and services produced by U.S. companies abroad or goods and services received in the U.S. as imports.  (For more, see: The Importance of Inflation and GDP.)

A more modern definition of a recession that's used by the National Bureau of Economic Research (NBER) Dating Committee, the group entrusted to call the start and end dates of a recession, is "a significant decline in economic activity spread across the economy, lasting more than a few months."

In 2007, an economist at the Federal Reserve Board (FRB), Jeremy J. Nalewaik, suggested that a combination of GDP and gross domestic income (GDI) may be more accurate in defining a recession. The following are some of the largest recessions in the history of the United States.

Historical Recessions

Let's take a look at some of these recessions according to some key characteristics.

  • Duration: How long did the official recession last?
  • GDP Decline: By how much did national income fall?
  • Peak Unemployment Rate: What proportion of the workforce was jobless?
  • Reasons and Causes: What unique historical circumstances contributed to the development of this recession?

The NBER officially declared an end to the economic expansion in February of 2020 as the U.S. fell into a recession amid the coronavirus pandemic.

The Roosevelt Recession: (May 1937 - June 1938)

  • Duration: 13 months
  • GDP Decline: 10%
  • Peak Unemployment Rate: 20%
  • Reasons and Causes: The stock market crashed in late 1937. Businesses blamed the "New Deal", a series of government-financed infrastructure work projects through the Works Projects Administration (WPA) and Civilian Conservation Corps (CCC).  These projects provided work for more than 250,000 men. The government blamed a "capital strike" (lack of investment) on the part of businesses, while "New Dealers" blamed cuts in WPA funding.  The first four years of Social Security insurance deductions pulled $2 billion out of circulation at this time.

The Union Recession: (February 1945 - October 1945)

  • Duration: Nine months
  • GDP Decline: 10.9%
  • Peak Unemployment Rate: 5.2%
  • Reasons and Causes: The tail-end of World War II, the beginning of demobilization of military forces, and the slow transition to civilian production marked this period. War production had virtually ceased and veterans were just beginning to re-enter the workforce. It was also known as the "Union Recession," as unions were beginning to reassert themselves. Minimum wages were on the rise and credit was tight.

The Post-War Recession: (November 1948 - October 1949)

  • Duration: 11 months
  • GDP Decline: 1.7%
  • Peak Unemployment Rate: 5.7%
  • Reasons and Causes: As returning veterans reentered the workforce in large numbers to compete for jobs with existing civilian workers who had entered the workforce during the war, unemployment began to rise. The government's response was minimal as it was much more worried about inflation than unemployment at the time.

The Post-Korean War Recession: (July 1953 - May 1954)

  • Duration: 10 months
  • GDP decline: 2.7%
  • Peak Unemployment Rate: 5.9%
  • Reasons and causes: After an inflationary period that followed the Korean War, more dollars were directed at national security. The Federal Reserve tightened monetary policy to curb inflation in 1952. The dramatic change in interest rates caused increased pessimism about the economy and decreased aggregate demand.

The Eisenhower Recession: (August 1957 - April 1958)

  • Duration: Eight months
  • GDP Decline: 3.7%
  • Peak Unemployment Rate: 7.4%
  • Reasons and Causes: The government tightened monetary policy compared to years prior to the recession to curb inflation, but prices continued to rise in the U.S. through 1959. The sharp worldwide recession and the strong U.S. dollar contributed to a foreign trade deficit.

The "Rolling Adjustment" Recession: (April 1960 - February 1961)

  • Duration: 10 months
  • GDP Decline: 1.6%
  • Peak Unemployment Rate: 6.9%
  • Reasons and Causes: This recession was also known as the "rolling adjustment" for many major U.S. industries, including the automotive industry. Americans began shifting to buying compact and often foreign-made cars and industry drew down inventories. Gross national product (GNP) and product demand declined.

The Nixon Recession: (December 1969 - November 1970)

  • Duration: 11 months
  • GDP Decline: 0.6%
  • Peak Unemployment Rate: 5.9%
  • Reasons and Causes: Increasing inflation caused the government to employ a very restrictive monetary policy. The structure of government expenditures added to the contraction in economic activity.

The Oil Crisis Recession: (November 1973 - March 1975)

  • Duration: 16 months
  • GDP Decline: 3%
  • Peak Unemployment Rate: 8.6%
  • Reasons and Causes: This long, deep recession was brought on by the quadrupling of oil prices and high government spending on the Vietnam War. This led to stagflation and high unemployment. Unemployment finally reached 9% in May of 1975, after the declared end of the recession. (For more, see: Stagflation in the 1970s.)

The Energy Crisis Recession: (January 1980 - July 1980)

  • Duration: Six months
  • GDP decline: 2.2%
  • Peak Unemployment Rate: 7.8%
  • Reasons and Causes: Inflation had reached 11.1% and the Federal Reserve raised interest rates and slowed money supply growth, which slowed the economy and caused unemployment to rise. Energy prices and supply were put at risk causing a confidence crisis as well as inflation.

The Iran/Energy Crisis Recession: (July 1981 - November 1982)

  • Duration: 16 months
  • GDP decline: 2.9%
  • Peak Unemployment Rate: 10.8%
  • Reasons and Causes: This long and deep recession was caused by the regime change in Iran. The world's fourth-largest producer of oil at the time, the country overthrew it’s U.S. backed government.  The "New" Iran exported oil at inconsistent intervals and at lower volumes, forcing prices higher. The U.S. government enforced a tighter monetary policy to control rampant inflation, which had been carried over from the previous two oil and energy crises.  The prime rate reached 20.5% in 1981.

The Gulf War Recession: (July 1990 - March 1991)

  • Duration: Eight months
  • GDP Decline: 1.5%
  • Peak Unemployment Rate: 6.8%
  • Reasons and causes: Iraq invaded Kuwait. This resulted in a spike in the price of oil in 1990, which caused manufacturing trade sales to decline. This was combined with the impact of manufacturing moving offshore as the provisions of the North American Free Trade Agreement (NAFTA) kicked in. In addition, the leveraged buyout of United Airlines triggered a stock market crash.

The 9/11 Recession: (March 2001 - November 2001)

  • Duration: Eight months
  • GDP Decline: 0.3%
  • Peak Unemployment Rate: 5.5%
  • Reasons and Causes: The collapse of the dotcom bubble, the 9/11 attacks, and a series of accounting scandals at major U.S. corporations contributed to this relatively mild contraction of the U.S. economy. In the next few months, GDP recovered to its former level. (For more information, see: Dotcom Bubble.)

The Great Recession: (December 2007 - June 2009)

  • Duration: Eighteen months
  • GDP Decline: 4.3%
  • Peak Unemployment Rate: 10.0%
  • Reasons and Causes: The collapse of the housing bubble of the 2000’s and resulting record foreclosures and a financial crisis that threw markets worldwide into a tailspin.  Oil prices spiked to record highs by mid 2008 and then crashed, devastating the U.S. oil industry. 

Covid-19 Recession (February 2020 - Ongoing)

  • Duration: Ongoing
  • GDP Decline: The Atlanta Fed's GDPNow survey sees the median consensus estimate for the second-quarter GDP at -53.8%.
  • Peak Unemployment Rate: 13.0% in May 2020
  • Reasons and Causes: The actions that were taken by the United States and other nations around the world—restricting travel, shuttering nonessential businesses, and implementing universal social distancing policies—to curb the spread of the 2019 novel coronavirus, which was officially declared a pandemic in March 2020 by the World Health Organization, have had severe economic consequences. On June 8, 2020, The National Bureau of Economic Research officially declared a recession in the U.S. economy. Although there has been much speculation, it is so far unknown what the shape of this recession will be, and the duration of the Covid-19 recession will only be obvious in hindsight.

The Bottom Line

So what do all these very different recessions have in common? In many cases, the most important single factor is a period of expansionary monetary policy in the years prior to the recession, sometimes to help fund government war spending or in an attempt to re-inflate the economy after the previous round of recession. Once the resulting debt bubbles pop or the end of a war leads to cutbacks in monetary expansion, several years worth of overextended, debt-based investments and malinvestments tend to be wiped out in a process of debt deflation in a relatively short period. This spikes unemployment and drags down GDP.  

Beyond the underlying monetary trends, real economic shocks often help to trigger the turning point into recession. For one, oil price swings appear to be consistent and frequent historical precursors to U.S. recessions. A spike in oil prices has preceded or coincided with 10 out of 12 post-WWII recessions. This highlights that while global integration of economies allowing for more effective cooperative efforts between governments has increased over time, the integration itself ties the world economies more closely together, making them more susceptible to problems outside their borders.