Recessions Getting Longer and Worse
Why we can expect future downturns to be more severe with higher unemployment rates.
The National Bureau of Economic Research (NBER) is generally looked to as the arbiter of declaring recessions and recoveries, with back-to-back quarters of negative GDP constituting the former and two quarters without declines tending to indicate such conditions may be behind us. But those parameters don't always hold to the letter.
I personally count 10 recessions since the first quarter of 1947 but would note that there have also been a handful of stand-alone negative GDP quarters that didn’t quite qualify, usually in fairly close proximity to official recessions. Let’s take a look at some of the more noteworthy downturn eras since World War II.
The 1947-1949 downturn was marked by average sequential GDP growth of .35%. Yet the worst unemployment rate was 3.9%!
The recession beginning in the third quarter of 1953 was pretty short-lived: three quarters total. Because fourth quarter 1953 registered such a severe decline (-1.58%), the average quarterly experience for the period was -.89%. The unemployment high point was 1954’s 5.5%, well demonstrating that quantity’s generally lagging property.
The mid-1950s saw another downtrend manifesting an average quarterly sequential decline over the period of -.06%. This period also includes the worst single quarterly decline since World War II, 2.71%, during the first quarter of 1958. Unemployment for 1959 and 1960 averaged 5.5%.
The economic experience of the late 1950s was capped off by a period beginning in the third quarter of 1959 and ending in the fourth quarter of 1960 marked by average sequential quarterly growth of just .15%. Unemployment peaked in 1961 and 1962; the average rate for both years was 6.7%.
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