Our nation struggles with many economic issues. The most dangerous to a successful economy and domestic peace however, is unemployment.
Many among us, still living, yet born in the 20’s will remember the many tough times, as listed below. During each of these tens of thousands of individuals lost their jobs, could not care for their families, some took their own lives.
The Great Depression
Lasting from 1929 until 1938, it was the biggest economic crisis in U.S. history. Unemployment reached 25% in 1933 and remained at 19% in 1938. The Depression ended because of three things: the New Deal, the end of the drought that caused the Dust Bowl, and increased spending for World War II.
This 11-month recession began in November 1948. It lasted until October 1949, when unemployment reached a peak of 7.9%. It was a mild adjustment as the economy continued adapting to peacetime production.
This recession lasted 10 months, from July 1953 to May 1954. It resulted from demobilization following the Korean War. Unemployment didn’t reach its peak of 6.1% until September 1954, four months after the recession ended. In 1953, GDP contracted 2.2% in the third quarter and 5.9% in Q4. In 1954, it contracted 1.9% in Q1.
In this recession, which took place from August 1957 to April 1958, GDP fell 4.1% in Q4 1957, then plummeted another 10% in Q1 1958. Unemployment didn’t reach its peak of 7.5% until July 1958. The Fed’s contractionary monetary policy is considered the cause of this economic slowdown.
Starting in April 1960, this recession lasted 10 months, until February 1961. GDP was -2.1% in Q2 1960, rose 2.0% in Q3, but was -5.0% in Q4. Unemployment reached a peak of 7.1% in May 1961. President John F. Kennedy ended the recession with stimulus spending. His opponent, Richard Nixon, said the recession cost him the election. He had been vice president, so voters blamed the Republicans for causing it.
This recession was relatively mild, lasting 11 months—from December 1969 to November 1970. GDP was -1.9% in Q4 1969. It was -0.6% in Q1, then rose 0.6% in Q2 and 3.7% in Q3. In Q4, it was -4.2% before rising 11.3% in Q1 1971. Unemployment peaked at 6.1% in December 1970.
This recession lasted 16 months, from November 1973 to March 1975. The Organization of Petroleum Exporting Countries (OPEC) is blamed for quadrupling oil prices. But the OPEC oil embargo alone didn’t cause such a deep recession. Two other factors contributed.
First, President Nixon instituted wage-price controls. This kept prices too high, reducing demand. Wage controls made salaries too high and forced businesses to lay off workers. Second, Nixon took the United States off the gold standard in response to a run on the gold held at Fort Knox, which led to inflation. The price of gold skyrocketed to $120 an ounce while the dollar’s value plummeted.
The result was stagflation and five quarters of negative GDP growth: 1973 Q3, -2.1%; 1974 Q1, -3.4%; Q3, -3.7%; Q4, -1.5%; and 1975 Q1, -4.8%. Unemployment reached a peak of 9% in May 1975, two months after the recession had ended.
The economy suffered a double whammy of two recessions in this period. There was one during the first six months of 1980. The second lasted 16 months, from July 1981 to November 1982.
The Fed caused this recession by raising interest rates to combat inflation. That reduced business spending. The Iranian oil embargo aggravated economic conditions by reducing U.S. oil supplies, which drove up prices.
GDP was negative for six of the 12 quarters. The worst was Q2 1980 at -8.0%. Until the 2008–2009 recession, that was the worst quarterly decline since the Great Depression. Unemployment rose to 10.8% in November and December 1982, the highest level in any modern recession. It was above 10% for 10 months. President Reagan lowered the tax rate and boosted the defense budget, helping to end the recession.
This recession ran nine months, from July 1990 to March 1991. The 1989 savings and loan crisis caused it. GDP was -3.6% in Q4 1990 and -1.9% in Q1 1991. Unemployment peaked at 7.8% in June 1992.
The 2001 recession lasted eight months, from March to November. It was caused by a boom and subsequent bust in dot-com businesses. The boom was partially created by the Y2K scare in 2000. Companies bought billions of dollars’ worth of new software because they were afraid the old systems weren’t designed to transition from the 1900s to the 2000s. But many dot-com businesses were significantly overvalued and failed.
The 9/11 attack worsened the recession. The economy contracted in two quarters: Q1, -1.1% and Q3, -1.7%. Unemployment continued rising until it peaked at 6.3% in June 2003.
The Great Recession was the worst financial crisis in the United States since the 1929 Depression. It also was the longest-lasting: from December 2007 to June 2009. The subprime mortgage crisis was the trigger. That created a global bank credit crisis in 2007. By 2008, the credit crisis had spread to the general economy through the widespread use of derivatives.
The economy shrank in five quarters, including four quarters in a row. Two quarters contracted more than 5%. In Q4 2008, GDP was -8.4%, worse than any other recession since the Great Depression. The recession ended in Q3 2009, when GDP turned positive, thanks to an economic stimulus package.
Today, under leadership that understands business and what makes it work, we have the lowest unemployment in 50 years.
Adapted from “History of U.S. Recessions in the United States”
By Kimberly Amadeo Updated May 30, 2019