There have been as many as 48 recessions in the United States dating back to the Articles of Confederation, and although economists and historians dispute certain 19th-century recessions, the consensus view among economists and historians is that "the [cyclical] volatility of GNP and unemployment was greater before the Great Depression than it has been since the end of World War II." Cycles in the country's agricultural production, industrial production, consumption, business investment, and the health of the banking industry contribute to these declines. U.S. recessions have increasingly affected economies on a worldwide scale, especially as countries' economies become more intertwined.
The unofficial beginning and ending dates of recessions in the United States have been defined by the National Bureau of Economic Research (NBER), an American private nonprofit research organization. The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than two quarters which is 6 months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales".
In the 19th century, recessions frequently coincided with a financial crisis. Determining the occurrence of pre-20th-century recessions is more difficult due to the dearth of economic statistics, so scholars rely on historical accounts of economic activity, such as contemporary newspapers or business ledgers. Although the NBER does not date recessions before 1857, economists customarily extrapolate dates of U.S. recessions back to 1790 from business annals based on various contemporary descriptions. Their work is aided by historical patterns, in that recessions often follow external shocks to the economic system such as wars and variations in the weather affecting agriculture, as well as banking crises.
Major modern economic statistics, such as unemployment and GDP, were not compiled on a regular and standardized basis until after World War II. The average duration of the 11 recessions between 1945 and 2001 is 10 months, compared to 18 months for recessions between 1919 and 1945, and 22 months for recessions from 1854 to 1919. Because of the great changes in the economy over the centuries, it is difficult to compare the severity of modern recessions to early recessions. in Before the COVID-19 recession began in March 2020, no post-World War II era had come anywhere near the depth of the Great Depression, which lasted from 1929 until 1941 (which included a bull market between 1933 and 1937) and was caused by the 1929 crash of the stock market and other factors.
Early recessions and crises (1785–1836) Attempts have been made to date recessions in America beginning in 1790. These periods of recession were not identified until the 1920s. To construct the dates, researchers studied business annals during the period and constructed time series of the data. The earliest recessions for which there is the most certainty are those that coincide with major financial crises.
Beginning in 1835, an index of business activity by the Cleveland Trust Company provides data for comparison between recessions. Beginning in 1854, the National Bureau of Economic Research dates recession peaks and troughs to the month. However, a standardized index does not exist for the earliest recessions. in
In 1791, Congress chartered the First Bank of the United States to handle the country's financial needs. The bank had some functions of a modern central bank, although it was responsible for only 20% of the young country's currency. In 1811 the bank's charter lapsed, but it was replaced by the Second Bank of the United States, which lasted from 1816 to 1836.
Name Dates Duration Time since previous recession Characteristics Panic of 1785 1785–1788 ~ years The panic of 1785, which lasted until 1788, ended the business boom that followed the American Revolution. The causes of the crisis lay in the overexpansion and debts incurred after the American independence, a postwar deflation, American manufacturers facing competition from their British counterparts, and the lack of adequate credit and a sound currency. The downturn was exacerbated by the absence of any significant interstate trade. Other factors were the refusal of the Kingdom of Great Britain to conclude a commercial treaty, and actual and pending defaults among debtor groups. The panic among business and propertied groups led to the demand for a stronger federal government. Copper Panic of 1789 1789–1793 ~ years ~0 years Loss of confidence in copper coins due to debasement and counterfeiting led to commercial freeze up that halted the economy of several states of the Northern United States and was not alleviated until the introduction of new paper money to restore confidence. Panic of 1792 1792 ~ months ~0 years Its causes included the extension of credit and excessive speculation. The panic was largely solved by providing banks the necessary funds to make open market purchases. Panic of 1796–1797 1796–1799 ~ years ~4 years Just as a land speculation bubble was bursting, deflation from the Bank of England (which was facing insolvency due to the cost of British involvement in the French Revolutionary Wars) crossed to North America and disrupted commercial and real estate markets in the United States and the Caribbean, and caused a major financial panic. Prosperity continued in the Southern United States, but economic activity was stagnant in the Northern United States for three years. The young United States engaged in the Quasi-War with France. 1802–1804 recession 1802–1804 ~2 years ~3 years A boom of war-time activity led to a decline after the Peace of Amiens ended the war between the United Kingdom and France. Commodity prices fell dramatically. Trade was disrupted by pirates, leading to the First Barbary War. Depression of 1807 1807–1810 ~ years ~3 years The Embargo Act of 1807 was passed by the United States Congress under President Thomas Jefferson as tensions increased with the United Kingdom. The Act severely impacted shipping-related industries in the United States. The Federalists fought the embargo and allowed American merchants to smuggle goods with their British counterparts in New England. Trade volumes, commodity prices and securities prices all began to fall. Macon's Bill Number 2 ended the embargoes in May 1810, and a recovery started. Daniel J. Leab, ed. Encyclopedia of American recessions and depressions (2 vol. ABC-CLIO, 2014). see volume one pages 41–90, and vol 2 pp 701-717 or documents for this era. 1812 recession 1812 ~6 months ~18 months The United States entered a brief recession at the beginning of 1812. The decline was brief primarily because the United States soon increased production to fight the War of 1812, which began June 18, 1812. in 1815–1821 depression 1815–1821 ~ years ~ years Shortly after the war ended on March 23, 1815, the United States entered a period of financial panic as bank notes rapidly depreciated because of inflation following the war. The 1815 panic was followed by several years of mild depression, and then a major financial crisis – the Panic of 1819, which featured widespread foreclosures, bank failures, unemployment, a collapse in real estate prices, and a slump in agriculture and manufacturing. 1822–1823 recession 1822–1823 ~1 year ~1 year After only a mild recovery following the lengthy 1815–1821 depression, commodity prices hit a peak in March 1822 and began to fall. Many businesses failed, unemployment rose and an increase in imports worsened the trade balance. 1825–1826 recession 1825–1826 ~1 year ~2 years The Panic of 1825, a stock crash following a bubble of speculative investments in Latin America led to a decline in business activity in the United States and the United Kingdom of Great Britain and Ireland. The recession coincided with a major panic, the date of which may be more easily determined than general cycle changes associated with other recessions. 1828–1829 recession 1828–1829 ~1 year ~2 years In 1826, the United Kingdom of Great Britain and Ireland banned US citizens from trading with British colonies, and in 1827, the United States adopted a counter-prohibition. Trade declined, just as credit became tight for manufacturers in New England. 1833–1834 recession 1833–1834 ~1 year ~4 years The United States' economy declined moderately in 1833–34. News accounts of the time confirm the slowdown. The subsequent expansion was driven by land speculation.
Free Banking Era to the Great Depression (1836–1929)
In the 1830s, U.S. President Andrew Jackson fought to end the Second Bank of the United States. Following the Bank War, the Second Bank lost its charter in 1836. From 1837 to 1862, there was no national presence in banking, but still plenty of state and even local regulation, such as laws against branch banking which prevented diversification. In 1863, in response to financing pressures of the Civil War, Congress passed the National Banking Act, creating nationally chartered banks. Since there was neither a central bank nor deposit insurance during this era, banking panics were common.
The dating of recessions during this period is controversial. Modern economic statistics, such as gross domestic product and unemployment, were not gathered during this period: Victor Zarnowitz evaluated a variety of indices to measure the severity of these recessions.
From 1834 to 1929, one measure of recessions is the Cleveland Trust Company index, which measured business activity and, beginning in 1882, an index of trade and industrial activity was available, which can be used to compare recessions.