A look at the past three recessions
Economists are warning the U.S. might be headed toward a recession after the stock market plunged into bear market territory this week and inflation hit a 40-year high last month.
A recession is defined as a significant decline in economic activity across the economy, usually for more than a few months. A recession stretches from the time the economy hits its apex to when it bottoms out, with the path from “trough” to “peak” called an expansion, or a normal state of the economy.
The U.S. has experienced 13 serious recessions in the past 75 years, and the average recession in that period lasted 11 months, according to the Congressional Research Service and Bureau of Economic Analysis.
Here’s a look at the last three recessions in the U.S.
2020
The 2020 recession was short-lived, occurring for just two months from February to April, making it the shortest recession in modern U.S. history.
When the coronavirus led to mass layoffs and shutdowns in the U.S., unemployment skyrocketed and the economy briefly entered the doldrums.
More than 21 million Americans lost their jobs from March to April 2020, and in the second quarter of 2020, the economy shrank by an annualized rate of more than 33 percent.
But there was nothing “fundamentally wrong” with the economy, as Federal Reserve Chairman Jerome Powell put it in March of that year. After adjusting to new health policies, Americans went back to work and the economy swiftly recovered.
A panel organized by the National Bureau of Economic Research, a private nonprofit, said last year that the 2020 “downturn had different characteristics and dynamics than prior recessions.”
“Nonetheless, the committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions,” it added.
2007-2009
The Great Recession was one of the most fearsome economic downturns in American history, along with the Great Depression in the 1930s.
The recession began in late 2007 and early 2008 after the housing market collapsed. Banking and investment firms, which had not been heavily regulated at the time, made predatory and toxic loans, including high-risk, mortgage-backed securities, or home and real estate bonds pooled together.
When the banking system failed — and the housing market bubbled and then bust — financial credit used by customers and businesses also flopped.
From late 2007 to mid-2009, nearly 8.7 million jobs were lost, according to the U.S. Bureau of Labor Statistics (BLS), and a quarter of all American households lost 75 percent of their wealth, while more than half of all families lost at least 25 percent of their wealth.
After the Great Recession ended in June 2009, the U.S. economy hit the longest-running upward swing in history.
2001
The first recession in the 21st century followed steady economic growth in the 1990s. It stretched from March 2001 to November 2001.
The recession was triggered by the burst of the dotcom bubble, when investors poured too much money into early Internet-based companies, overvaluing the actual worth of the sector.
Another factor was the 9/11 attack on the Twin Towers in New York City, which had a lasting impact on the tourism industry.
The 2001 recession is considered to have been relatively mild, although more than 1.3 million people lost their jobs, according to the BLS.
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