History of Recession in Timeline

A recession is an economic contraction marked by a broad decline in economic activity, often triggered by a drop in spending. Common causes include financial crises, trade shocks, supply shocks, bursting economic bubbles, and disasters. The IMF notes the absence of an official, universally accepted definition of a recession.

1948: Recessions and Stock Market Declines

Since 1948, ten recessions were preceded by a stock market decline, by a lead time of 0 to 13 months (average 5.7 months), while ten stock market declines of greater than 10% in the Dow Jones Industrial Average were not followed by a recession.

1949: W-shaped recession in the US

In 1949, the US experienced a W-shaped recession, characterized by a double-dip recession.

1954: V-shaped recession in the US

In 1954, the US experienced a v-shaped recession, characterized by a short-and-sharp contraction followed by rapid and sustained recovery.

1974: Bureau of Labor Statistics Suggests Quantitative Recession Definition

In 1974, The New York Times published an article where Julius Shiskin, Commissioner of the Bureau of Labor Statistics, proposed a quantitative definition of a recession, translating the bureau's qualitative definition into a more accessible form.

1974: U-shaped recession in the US

In 1974, the US experienced a U-shaped recession, characterized by a prolonged slump.

1975: U-shaped recession in the US

In 1975, the US experienced a U-shaped recession, characterized by a prolonged slump.

1980: W-shaped recession in the US

In 1980, the US experienced a W-shaped recession, characterized by a double-dip recession.

1982: W-shaped recession in the US

In 1982, the US experienced a W-shaped recession, characterized by a double-dip recession.

1990: Japan's Great Recession Begins

In 1990, Japan's "Great Recession" began, triggered by a collapse in land and stock prices, causing Japanese firms to have negative equity.

1990: V-shaped recession in the US

In 1990, the US experienced a v-shaped recession, characterized by a short-and-sharp contraction followed by rapid and sustained recovery.

1991: V-shaped recession in the US

In 1991, the US experienced a v-shaped recession, characterized by a short-and-sharp contraction followed by rapid and sustained recovery.

1993: U-shaped recession in Japan

In 1993, Japan experienced a U-shaped recession, characterized by a prolonged slump.

1994: U-shaped recession in Japan

In 1994, Japan experienced a U-shaped recession, characterized by a prolonged slump.

1997: L-shaped recession in Japan and U-shaped in Korea, Hong Kong and South-east Asia

In 1997, Japan experienced 8 out of 9 quarters of contraction which can be described as L-shaped and Korea, Hong Kong and South-east Asia experienced U-shaped recessions.

1998: Japanese Firms Become Net Savers

After 1998, Japanese firms overall became net savers, as opposed to borrowers, during the Great Recession.

1998: U-shaped recessions in Korea, Hong Kong and South-east Asia

In 1998, Korea, Hong Kong and South-east Asia experienced U-shaped recessions.

1999: L-shaped recession in Japan

In 1999, Japan experienced 8 out of 9 quarters of contraction which can be described as L-shaped.

2003: Peak Decline in Corporate Investment in Japan

Between 1990 and 2003, corporate investment in Japan fell enormously (22% of GDP) to its peak decline during the Great Recession.

2008: Economic Crisis Context

In 2008, Gauti B. Eggertsson of the Federal Reserve Bank of New York, writes that cutting taxes on labor or capital is contractionary under certain circumstances, such as those that prevailed following the economic crisis of 2008, and that temporarily increasing government spending at such times has much larger effects than under normal conditions.

April 2009: Yellen Discusses Paradoxes of Deleveraging

In April 2009, U.S. Federal Reserve Vice Chair Janet Yellen discussed the paradox of deleveraging, where precautions that may be smart for individuals and firms magnify the distress of the economy as a whole.

2009: Recessions Prediction

In 2009, Analysis by Prakash Loungani of the International Monetary Fund found that there were zero consensus predictions one year earlier for the 49 recessions during 2009.

2009: Krugman Describes U.S. Recession as Liquidity Trap

In 2009, economist Paul Krugman described the U.S. recession as a liquidity trap, where interest rates near zero fail to stimulate the economy.

March 2010: Krugman Estimates Developed Countries in Liquidity Trap

In March 2010, Paul Krugman estimated that developed countries representing 70% of the world's GDP were caught in a liquidity trap.

December 2010: Krugman on Government Spending

In December 2010, Paul Krugman wrote that significant, sustained government spending was necessary because indebted households were paying down debts and unable to carry the U.S. economy as they had previously.

2010: Krugman Discusses Balance Sheet Recession

In 2010, Paul Krugman discussed the balance sheet recession concept, agreeing with Koo's assessment but arguing that monetary policy could also affect savings behavior.

July 2012: Balance Sheet Recession Research Survey

In July 2012, a survey reported that consumer demand and employment are affected by household leverage levels, with durable and non-durable goods consumption declining as households moved from low to high leverage.

2014: Paul Krugman on Balance Sheet Recession

In 2014, economist Paul Krugman wrote that the best working hypothesis is that the financial crisis was only one manifestation of a broader problem of excessive debt - a so-called "balance sheet recession".

2017: Insights into the Complex Dynamics that Contribute to Economic Downturns

In 2017, Patel noted that by examining these factors comprehensively, economists gain insights into the complex dynamics that contribute to economic downturns and can formulate effective strategies for mitigating their impact.

2017: Tax Cuts and Jobs Act Claim

In 2017, the Trump administration claimed that lower effective tax rates on new investment imposed by the Tax Cuts and Jobs Act of 2017 would raise investment, thereby making workers more productive and raising output and wages.

2018: Recession Encompasses Declines in Economic Activity

In 2018, Smith noted that a recession encompasses declines in component measures of economic activity, such as GDP, including consumption, investment, government spending, and net export activity.

2019: Economists Gain Insights into Complex Dynamics

In 2019, Anderson stated that by examining these factors comprehensively, economists gain insights into the complex dynamics that contribute to economic downturns and can formulate effective strategies for mitigating their impact.

2019: Investment Patterns Indicate Little Effect on Investment Growth

In 2019, Investment patterns in the United States through 2019, however, indicated that the supply-side incentives of the TCJA had little effect on investment growth.

2020: Economic Activity Measures Indicate Recession Drivers

In 2020, Johnson & Thompson stated that summary measures of economic activity are indicative of underlying drivers such as employment levels and skills, household savings rates, corporate investment decisions, interest rates, demographics, and government policies.

2021: Inflation Surge

In 2021, the Federal Reserve sharply increased the fed funds rate to combat the 2021–2023 inflation surge.

July 2022: Treasury Yield Curve Inversion Begins

In July 2022, the longest and deepest Treasury yield curve inversion in history began as the Federal Reserve sharply increased the fed funds rate to combat the 2021–2023 inflation surge.

2023: Inflation Surge

In 2023, the Federal Reserve sharply increased the fed funds rate to combat the 2021–2023 inflation surge.

June 2024: Yield Curve Begins Re-steepening

In June 2024, the yield curve began re-steepening toward positive territory, as it had at other points during that inversion.

July 2024: Economists Expect Continued Economic Growth

By July 2024, despite widespread predictions of an imminent recession, economic growth remained steady, and a Reuters survey of economists expected the economy to continue growing for the next two years.