Several factors combined to create the Great Depression. The Fed raised interest rates in the spring of 1928 and continued despite the recession. The 1929 stock market crash destroyed businesses and life savings. A 10-year drought in the Midwest created the Dust Bowl that devastated farmers.16
The New Deal ended the first recession, boosting growth by 10.8%.17 The second recession ended when the drought did, and the government increased spending for World War II.18
This recession lasted eight months, from February to October. It was a natural result of the demobilization from World War II.1920
This 11-month recession began in November 1948 and lasted until October 1949, when unemployment peaked at 7.9%.1921 It was caused by the Fed raising interest rates too quickly.20
This recession lasted 10 months, from July 1953 to May 1954.19 It resulted from tightened monetary policy following the Korean War.22 Unemployment didn’t reach its peak of 6.1% until September 1954, four months after the recession ended. In 1953, GDP contracted by 2.2% in the third quarter and by 5.9% in Q4. In 1954, it contracted by 1.9% in the first quarter.2324
In this recession, which took place from August 1957 to April 1958,19 GDP fell 4.1% in Q4 1957, then contracted to a low of 10.0% in Q1 1958.2 Unemployment didn’t reach its peak of 7.5% until July 1958.25 The Fed’s contractionary monetary policy caused this economic slowdown.26
Starting in April 1960, this recession lasted 10 months until February 1961.19 GDP was -2.1% in Q2 1960, rose by 2.0% in Q3, but was down by 5.0% in Q4.24 Unemployment reached a peak of 7.1% in May 1961.27
President John F. Kennedy ended the 1960 recession with stimulus spending.28 His opponent, Richard Nixon, blamed the recession for costing him the election.29
This recession was relatively mild, lasting 11 months—from December 1969 to November 1970.19 Unemployment peaked at 6.1% in December 1970.30 The economy contracted by 1.9% in Q4 1969 and by 0.6% in Q1 1970. GDP rose by 0.6% in Q2 1970 and 3.7% in Q3 but fell by 4.2% in Q4. The economy recovered in Q1 1971, increasing by 11.3%.24
This recession lasted 16 months, from November 1973 to March 1975.19 The OPEC oil embargo is blamed for quadrupling oil prices, but actions taken by President Richard Nixon also contributed to the recession.
First, Nixon instituted wage-price controls. They 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 while the dollar’s value plummeted.3129
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 9.0% in May 1975, two months after the recession ended.3224
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 1982.19 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 prices up.3334
GDP was negative for six of the 12 quarters. The worst was Q2 1980 at -8.0%.24 Unemployment rose to 10.8% in November and December 1982. It was above 10% for 10 months.35
This recession ran for nine months, from July 1990 to March 1991.19 It was caused by the 1989 savings and loan crisis, higher interest rates, and Iraq’s invasion of Kuwait.36 GDP was -3.6% in Q4 1990 and -1.9% in Q1 1991.24 Unemployment peaked at 7.8% in June 1992.37
Recessions are easier tracked in hindsight. The Bureau of Economic Analysis (BEA) makes initial projections about Gross Domestic Product (GDP) early each quarter and then revises its GDP estimates as it receives new data, a process that usually takes place in July. It can be difficult to correct a recession once it’s already started.2
In its first decade, the 21st century experienced three recessions. Each was worse than the one before it, but for different reasons.
The 2001 recession lasted eight months, from March to November.19 It was caused by a boom and subsequent bust in dot-com businesses. The Y2K scare had partially created the boom 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. Many dot-com businesses were significantly overvalued and failed.38
The 9/11 attack worsened the recession. The economy contracted in two quarters: Q1 by -1.3% and Q3 by -1.6%.24 Unemployment continued rising until it peaked at 6.3% in June 2003.39
The Great Recession lasted from December 2007 to June 2009, the longest contraction since the Great Depression.19 The subprime mortgage crisis triggered a global bank credit crisis in 2007. By 2008, the damage had spread to the general economy through the widespread use of derivatives.40
GDP in 2008 shrank in three quarters, including an 8.5% drop in Q4. The unemployment rate rose to 10% in October 2009, lagging behind the recession that caused it.4124
The recession ended in Q3 2009, when GDP turned positive, thanks to the American Recovery and Reinvestment Act.42
The 2020 recession was the worst since the Great Depression. In March 2020, the Federal Reserve lowered the fed funds rate to basically 0%.43 Congress issued billions of dollars in aid.44
The U.S. economy contracted a record 31.2% in the second quarter after falling 5.1% in the previous quarter.24
In April 2020, the U.S. economy lost an astonishing 20.5 million jobs,45 sending the unemployment rate skyrocketing to 14.7%.46 It remained in the double digits until August. Uncertainty over the pandemic’s impact also caused the 2020 stock market crash.47
Although the economy grew 33.8% in the third quarter, it was not enough to make up for earlier losses.4824
Frequently Asked Questions (FAQs)
How often do recessions occur in the U.S.?
There have been 11 recessions since 1948, averaging out to about one recession every six years.49 However, periods of economic expansion are varied and have lasted as little as one year or as long as a decade.
The average recession before 2007 lasted about 11 months. The Great Recession lasted 18 months.50 The 2020 recession lasted just two months—the shortest on record.51
What is the difference between a recession and a depression?
An economic depression lasts longer than a recession, and it causes greater damage to an economy. The Great Depression ravaged the economy over a matter of years, while recessions are typically measured in months.
Correction – Oct. 19, 2022: This article has been updated to correct the Fed’s policy on the fed funds rate after it lowered it to basically 0% in 2020.