The 2007-2009 Recession: Similarities to and
Differences from the Past
Marc Labonte
Specialist in Macroeconomic Policy
October 6, 2010
Congressional Research Service
7-5700
www.crs.gov
R40198
CRS Report for Congress
Prepared for Members and Committees of Congress
The 2007-2009 Recession: Similarities to and Differences from the Past
Summary
According to the National Bureau of Economic Research (NBER), the U.S. economy was in a
recession for 18 months from December 2007 to June 2009. It was the longest and deepest
recession of the post-World War II era. The recession can be separated into two distinct phases.
During the first phase, which lasted for the first half of 2008, the recession was not deep as
measured by the decline in gross domestic product (GDP) or the rise in unemployment. It then
deepened from the third quarter of 2008 to the first quarter of 2009. The economy continued to
contract slightly in the second quarter of 2009, before returning to expansion in the third quarter.
The recent recession features the largest decline in output, consumption, and investment, and the
largest increase in unemployment, of any post-war recession.
Previously, the longest and deepest of the post-war recessions were those beginning in 1973 and
1981. Both of those recessions took place in a context of high inflation that made the Federal
Reserve (Fed) hesitant to aggressively reduce interest rates to stimulate economic activity. The
Fed has not shown a similar reluctance in the recent recession, bringing short-term rates down to
almost zero. Although inflation exceeded the Fed’s “comfort zone” in 2007 and 2008, it was not
nearly as high as it was in the 1970s or 1980s recessions. The economy briefly experienced
deflation (falling prices) at the end of 2008, and inflation has generally remained very low since.
Deflation may be a bigger threat to the economy in the near term, although some economists are
fearful that the Fed’s actions will cause inflationary problems once the economy returns to full
employment.
Both the 1973 and 1981 recessions also featured large spikes in oil prices near the beginning of
the recession—as did the recent one. Disruptions to oil markets and recessions have gone hand in
hand throughout the post-war period.
The previous two recessions (beginning in 1991 and 2001) were unusually mild and brief, but
subsequently featured long “jobless recoveries” where growth was sluggish and unemployment
continued to rise. The recent recession did not feature a jobless recovery longer than the norm,
but employment growth has been weak in 2010.
A decline in residential investment (house building) during a recession is not unusual, and it is not
uncommon for residential investment to decline more sharply than business investment and to
begin declining before the recession. The recent contraction in residential investment was
unusually severe, however, as indicated by the atypical decline in national house prices.
One unique characteristic of the recent recession was the severe disruption to financial markets.
Financial conditions began to deteriorate in August 2007, but became more severe in September
2008. While financial downturns commonly accompany economic downturns, financial markets
have continued to function smoothly in previous recessions. This difference has led some
commentators to instead compare the recent recession to the Great Depression. While the onset of
both crises bear some similarities, the effects on the broader economy have little in common. In
the first contraction of the Great Depression, lasting from 1929 to 1933, GDP fell by almost 27%,
prices fell by more than 25%, and unemployment rose from 3.2% to 25.2%. The changes in GDP,
prices, and unemployment in the recent recession were much closer to those experienced in other
post-war recessions than the Great Depression. Most economists blame the severity of the Great
Depression on policy errors—notably, the decision to allow the money supply to contract and
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The 2007-2009 Recession: Similarities to and Differences from the Past
thousands of banks to fail. By contrast, in the recent recession policymakers have aggressively
intervened to stimulate the economy and provide direct assistance to the financial sector.
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The 2007-2009 Recession: Similarities to and Differences from the Past
Contents
Introduction ................................................................................................................................1
The Length and Depth of Recessions...........................................................................................1
Unemployment in Recessions......................................................................................................3
Consumption and Investment in Recessions ................................................................................5
Recessions and Oil Prices............................................................................................................6
Recessions and the World Economy ............................................................................................6
Recessions and the Financial Sector ............................................................................................ 7
Comparisons Between the Recent Recession and the Great Depression .......................................7
Tables
Table 1. Economic Indicators During Post-War Recessions .........................................................2
Table 2. The Unemployment Rate at a Recession’s End and Its Subsequent Peak Since
World War II ............................................................................................................................4
Table 3. Comparing the First Contraction of the Great Depression to the Recent
Recession.................................................................................................................................8
Contacts
Author Contact Information ........................................................................................................8
Congressional Research Service
The 2007-2009 Recession: Similarities to and Differences from the Past
Introduction
According to the National Bureau of Economic Research (NBER), the U.S. economy was in a
recession for 18 months from December 2007 to June 2009. It was the longest and deepest
recession of the post-World War II era. This report provides information on the patterns found
across past recessions since World War II to gauge whether and how this recession might be
different.
There is no simple, rule-of-thumb measure to determine when recessions begin or end.
Recessions are officially declared by the National Bureau of Economic Research (NBER), a non-
profit research organization.1 The NBER defines a recession as a “significant decline in economic
activity spread across the economy, lasting more than a few months” based on a number of
economic indicators, with an emphasis on trends in employment and income. 2 It is unlikely that
all of those indicators will begin declining or rising simultaneously. Thus, when comparing
historical episodes, some of the symptoms associated with a recession may occur before or after
the recession has officially begun or ended. In the recent episode, gross domestic product (GDP)
began to fall (in the fourth quarter of 2007) before employment (in January 2008), and both
deteriorated significantly in the third quarter of 2008. The economy began to grow again in the
third quarter of 2009, but employment continued to fall through December 2009.
The Length and Depth of Recessions
Recessions are not uncommon—2008 marked the 11th since World War II. In recent years,
recessions have been less frequent—from 1982 to 2001, there were only two recessions—but the
length between the recent one and the prior one, 73 months, was comparable to the frequency of
recessions from 1945 to 1981.
As can be seen from Table 1, the recent recession was 18 months long, making it the longest of
the post-war period. 3 It was almost twice as long as the median length of post-war recessions (9.5
months). Recessions end because of monetary and fiscal stimulus—both were employed in the
recent episode4—and because markets automatically adjust.
1
The NBER announced in December 2008 that the recent recession began in December 2007. It announced in
September 2010 that the recession had ended in June 2009. For more information, see CRS Report R40052, What is a
Recession and Who Decided When It Started?, by Brian W. Cashell.
2
National Bureau of Economic Research, Determination of the December 2007 Peak in Economic Activity, January 7,
2008, http://www.nber.org/cycles/dec2008.html.
3
Another possibility is that the NBER could have dated the beginning of the recession later in 2008, once
unemployment began rising more quickly. If it had, then the recession would have been closer to the average for the
post-war period, but the output decline would still have been the most severe.
4
For a review of policy steps already taken and current policy proposals, see CRS Report R40104, Economic Stimulus:
Issues and Policies, by Jane G. Gravelle, Thomas L. Hungerford, and Marc Labonte.
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The 2007-2009 Recession: Similarities to and Differences from the Past
Table 1. Economic Indicators During Post-War Recessions
Cumulative Percent Change
Duration
Dates (months) GDP Consumption Investment
Nov. 1948 - Oct. 1949 11 -1.6% 3.4% -10.2%
July 1953 - May 1954 10 -2.6 -0.5 -3.4
Aug. 1957 - April 1958 8 -3.7 -1.3 -8.0
April 1960 - Feb. 1961 10 -1.6 1.0 -5.1
Dec. 1969 - Nov. 1970 11 -0.6 2.5 -2.6
Nov. 1973 - March 1975 16 -2.8 -0.7 -18.4
Jan. 1980 - July 1980 6 -2.2 -1.2 -8.1
July 1981 - Nov. 1982 16 -2.7 0.1 -9.3
July 1990 - Mar. 1991 8 -1.4 -0.7 -7.2
March 2001 - Nov. 2001 8 -0.3 1.2 -3.2
Dec. 2007 - June 2009 18 -4.1 -2.3 -23.4
Source: National Bureau of Economic Research; CRS calculations based on data from Bureau of Labor Statistics,
Bureau of Economic Analysis.
Notes: Table measures changes in economic indicators from peak to trough, which do not always correspond
with NBER business cycle dates. Investment growth excludes changes in inventories.
Recessions affect economic well-being by their length and depth. When considering depth, the
recent recession can be separated into two distinct phases. During the first phase, which lasted for
the first two quarters of 2008, the recession was not deep as measured by the change in GDP or
unemployment. It deepened in the third quarter of 2008, however, and remained deep through the
first quarter of 2009. After a slight further decline in the second quarter, the economy returned to
expansion in the third quarter of 2009.
The fall in GDP during the recent recession, a cumulative 4.1%, was the deepest of the post-war
period. By contrast, output fell by 1.4% in the 1990-1991 recession and 0.3% in the 2001
recession. The decline in output after the second quarter of 2008 was even larger than over the
entire recession. Most of the decline occurred from the third quarter of 2008 to the first quarter of
2009. The 1981 recession was the last recession to feature consecutive quarters of steep declines
in GDP.
The 1973 and 1981 recessions were also unusually long and deep, in terms of lost output. During
the recession beginning in 1973, GDP fell by a cumulative 3%. During the recession beginning in
1981, GDP fell by a cumulative 2.9%, and this recession came on the heels of a 2.2% decline in
GDP in a separate recession one year earlier.
Economists often attribute the unusual length and depth of the 1973 and 1981 recessions in part to
the Federal Reserve’s decision to keep interest rates high. The rate targeted by the Fed, the federal
funds rate, peaked at 12.9% in July 1974 and 19% in July 1981. (After adjusting for inflation,
these rates were not nearly as high as they appear because inflation was so much higher at the
time.) The Fed had raised rates that high in order to reduce inflation, which, as measured in the
GDP accounts, peaked at an annualized rate of 12.8% in the third quarter of 1974 and 11.1% in
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The 2007-2009 Recession: Similarities to and Differences from the Past
the fourth quarter of 1980. For that reason, some economists have described these recessions as
“made in Washington”—had the Fed not raised rates so high, they argue, the recessions would
presumably have been shorter and milder (although inflationary problems might have worsened).
This dynamic has not been important in the recent recession, as the federal funds rate’s recent
peak was 5.25% and was reduced before the recession had begun, eventually falling to almost
zero. Rising inflation was initially a concern in the current episode, but has never come close to
the rates of the 1970s and 1980s—it peaked at 4.2% in the first quarter of 2007. Rising energy
and commodity prices were temporarily pushing inflation up in the first half of 2008. Since then,
declines in those prices temporarily led to deflation (falling prices) at the end of 2008, with very
low inflation since.
As the economy gradually recovers, views are divided on the outlook for inflation. Some
commentators point to a federal funds rate of zero and the unprecedented scale of the Fed’s
intervention in financial markets as policies that will ultimately push inflation higher. Through
direct lending and asset purchases, the Fed’s outstanding support to the financial sector has, at
times, exceeded $1 trillion, compared with less than $1 billion before the financial crisis began. 5
In normal times, such interest rate and lending policies would be expected to be highly
inflationary. But as the recession drove down aggregate demand, it put downward pressure on
inflation. Other commentators fear that the recession was severe enough that deflation is a greater
threat than inflation. They argue that the Fed’s intervention in financial markets was necessary to
avoid a “liquidity trap,” where lower interest rates no longer stimulate interest-sensitive spending.
Although the Fed has brought the federal funds rate down to near zero, because it was only 5.25%
when the Fed began reducing rates, the Fed’s scope for easing monetary policy through
traditional methods was somewhat limited. By contrast, the federal funds rate, although high, was
reduced (peak to trough) by 6.8 percentage points in the 1973 recession and by 10.5 percentage
points in the 1981 recession.
Unemployment in Recessions
Table 2 shows the rise in unemployment in all 11 post-war recessions. Unsurprisingly, the
recessions with the deepest declines in output also featured the largest increases in
unemployment. From the expansion peak to post-recession high, the 1973 recession saw an
increase in the unemployment rate of 4.2 percentage points, and the 1981 recession saw an
increase of 3.6 percentage points (or 4.8 percentage points compared with the expansion that
ended in 1980). Unemployment peaked at 10.1% in October 2009, a 5.1 percentage point increase
compared with the previous expansion peak. The 1981-1982 recession was the only other
recession in the post-war period in which unemployment topped 10%.
5
See CRS Report RL34427, Financial Turmoil: Federal Reserve Policy Responses, by Marc Labonte
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The 2007-2009 Recession: Similarities to and Differences from the Past
Table 2.The Unemployment Rate at a Recession’s End and Its Subsequent Peak
Since World War II
Dates of Business Unemployment Unemployment Peak Unemployment Rate
Cycle Peak and Rate at Rate at Recession
Trough Expansion Peak Trough Level Date
Nov. 1948 - Oct. 1949 3.8% 7.9% 7.9% Oct. 1949
July 1953 - May 1954 2.6% 5.9% 6.1% Sept. 1954
Aug. 1957 - Apr. 1958 4.1% 7.4% 7.5% July 1958
Apr. 1960 - Feb. 1961 5.2% 6.9% 7.1% May 1961
Dec. 1969 - Nov. 1970 3.5% 5.9% 6.1% Aug. 1971
Nov. 1973 - Mar. 1975 4.8% 8.6% 9.0% May 1975
Jan. 1980 - July 1980 6.3% 7.8% 7.8% July 1980
July 1981 - Nov. 1982 7.2% 10.8% 10.8% Nov. 1982
July 1990 - Mar. 1991 5.5% 6.8% 7.8% June 1992
Mar. 2001 - Nov. 2001 4.3% 5.5% 6.3% July 2003
Dec. 2007 – June 2009 5.0% 9.5% 10.1% Oct. 2009
Average 4.8% 7.5% 7.9% -
Source: CRS Report R40798, Unemployment and Employment Trends Before and After the End of Recessions; based
on data from the Bureau of Labor Statistics.
Most of the increase in unemployment in the recent recession occurred after the first six months
of the recession, underlining the initial mildness of the recession. The rise in the unemployment
rate during this recession was comparable to the recessions since 1960 for the first 10 months
following the recession’s onset. Beginning in the 11th month, however, it followed a pattern
similar but even more severe than the two “deep and long” recessions of 1973 and 1980.
(Unemployment leveled off after about a year in the other four recessions since 1960.) The recent
recession eventually featured the largest increase in unemployment in the post-war period.
Unemployment rose for 22 months, the longest period of rising unemployment since World War
II. The 1973 and 1981 recessions were the only other two in the post-war period where
unemployment continued to rise after about a year; in the 1973 recession, it rose for 19 months.
The previous two recessions, in 1991 and 2001, were mild and brief as measured by the decline in
GDP, and had some of the smallest increases in unemployment in the post-war period. This is not
the whole story, however, because, in both cases, unemployment continued to rise for over a year
after the recession had ended. (In every other post-war recession, with the exception of the one
beginning in November 1970, unemployment began falling within six months of the recession’s
end.) These two episodes have therefore been called “jobless recoveries.” If the rise in
unemployment in the jobless recovery were included, the episode beginning in 1991 would have
featured an above average rise in unemployment; but the episode beginning in 2001 would still
remain below average. It is unclear whether the economy has changed in some fundamental way
that makes jobless recoveries more likely from now on, or if it was simply a coincidence that the
previous two recessions ended in this way.
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The 2007-2009 Recession: Similarities to and Differences from the Past
Job growth following the recent recession was more typical in that employment began rising in
January 2010, seven months after the recession officially ended. Less typically, subsequent
employment growth has been weak.
Consumption and Investment in Recessions
The recent recession has also featured the largest decrease in consumption and private fixed
investment spending of any post-war recession. There are a few commonalities found across all
previous post-war recessions. First, in all cases, consumption spending did not weaken as much
as GDP, as shown in Table 1. In fact, in five out of 11 recessions, consumption continued to grow
while GDP fell. To the extent that households can adjust their saving and borrowing levels, they
are thought to generally prefer to “smooth” consumption over time, avoiding sudden increases
and decreases. In the recent recession, consumption declined relatively rapidly in the third and
fourth quarters of 2008, with small positive and negative changes in the other quarters. Consistent
with the historical pattern, consumption has fallen by proportionately less than output
cumulatively.
Second, in all recessions, fixed investment spending fell more sharply than GDP. This evidence
casts doubt on a popular explanation that recessions are caused by declines in consumption. It
suggests to some that the primary driver of the business cycle is cyclical changes in investment
demand. 6 Investment demand is separated into two categories—business investment (in plant and
equipment) and residential investment (home building). Cyclical changes in business investment
could be driven by changes in business conditions, confidence, or credit conditions. Residential
investment is driven by changes in housing demand and credit conditions. Changes in credit
conditions are heavily influenced by monetary policy.
Both business investment and residential investment fell in each of the post-war recessions. In
eight out of 10 recessions, there was a larger percentage decline in residential investment than in
business investment.7 The percentage decline in residential investment was much larger in the
recent recession—beginning in the second quarter of 2006, residential investment fell by more
than an annualized rate of 10% for thirteen straight quarters, while business investment fell by
more than 10% in only two quarters. Further, in nine out of 10 past recessions, the decline in
residential investment preceded the decline in GDP growth.8 This pattern held in the recent
recession as well. Many economists have argued that the housing crash was a root cause of the
recent recession.
The fact that the decline in residential investment preceded the decline in GDP is not necessarily
evidence that housing crashes have also caused other post-war recessions. It may be that
recessions are caused by a tightening in credit conditions, and residential investment is the sector
that is first and most affected by tighter credit conditions. For example, the deep decline in
6
Unless one made the case that changes in investment were in response to anticipated changes in consumption
spending.
7
Since business investment accounts for a larger share of GDP than residential investment, the decline in dollar terms
was not always larger.
8
Economist Edward Leamer estimates that residential investment is responsible for 26% of the weakening in the
economy before the average recession, and 11% of the weakness during the recession. Edward Leamer, “Housing is the
Business Cycle,” National Bureau of Economic Research working paper, no. 13428 (September 2007).
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The 2007-2009 Recession: Similarities to and Differences from the Past
residential investment in the early 1980s is usually attributed to the Fed’s decision to push the
federal funds rate as high as 19%. While residential investment has fallen in all other post-war
recessions, national house prices had not (since the major data series were first collected), until
now.9 In the recent recession, national house prices fell 15% peak to trough, 10 and residential
investment fell by more than half from peak to trough. Unlike many other post-war recessions,
housing may be a cause, rather than a symptom, of the recent recession.
Recessions and Oil Prices
Another commonality between the recent recession and past recessions is the behavior of oil
prices. The recessions of 1973 and the early 1980s are remembered for their oil shocks, and this
pattern is not uncommon. In a well-known article, economist James Hamilton identified
disruptions to oil supply before all but one of the post-war recessions—a pattern that has
continued in every recession since his article was published, including the latest.11 Crude oil
prices rose from $51 per barrel in January 2007 to a peak of $129 per barrel in July 2008. The
average price in 2009 was about half the 2008 peak price, which should eventually offset much of
the contractionary effects of the previous price increase on GDP. Evidence against attributing the
economic downturn to rising oil prices would be the fact that oil prices rose significantly in the
previous expansion without any noticeable effect on GDP growth. For example, prices rose from
$37 per barrel in December 2004 to $69 per barrel in July 2006.
Recessions and the World Economy
As a result of the current global nature of the financial turmoil, the recent recession was
widespread throughout the world. 12 In 2009, world GDP growth was -0.6% overall and -3.2% in
developed economies, contracting in all of the G-7 economies. 13 A widespread recession is not
historically unusual. For example, between 1980 and 1982, all of the G-7 countries except France
and Japan experienced a contraction in GDP for at least one year (and growth was close to zero in
France in 1981). Likewise, between 1991 and 1993, all of the G-7 countries except Japan
experienced a contraction in GDP for at least one year (and growth was close to zero in Japan in
1992 and 1993). The global nature of the recession could potentially prolong and deepen it
because there would be less demand abroad for a country’s exports. In a study of historical
recessions in industrial countries, the International Monetary Fund (IMF) found that recessions
that were highly synchronized internationally lasted an average of four months longer and GDP
fell an average of 1% more than in other recessions. 14
9
Prices may have fallen during the Great Depression and previous recessions for which official data are not available.
10
Based on the Federal Housing Finance Administration’s Purchase-Only House Price Index, a national measure of
single-family houses with conforming mortgages based on resale data.
11
James Hamilton, “Oil and the Macroeconomy Since World War II,” Journal of Political Economy, vol. 91, no. 2,
1983, p. 228.
12
See CRS Report RL34742, The Global Financial Crisis: Analysis and Policy Implications, coordinated by Dick K.
Nanto.
13
The G-7 countries consist of the United States, United Kingdom, France, Italy, Germany, Canada, and Japan.
14
International Monetary Fund, World Economic Outlook, Washington, DC, April 2009, p. 111.
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The 2007-2009 Recession: Similarities to and Differences from the Past
Recessions and the Financial Sector
A primary reason that the recent recession was longer and deeper than normal is the severity of
the financial downturn that began in August 2007 and worsened dramatically in September 2008.
As noted above, the recession was initially mild, and the decline in GDP accelerated markedly
after the financial downturn worsened. Although a diminished investor appetite for risk and a
stock market decline before or during a recession is common, the recent recession has featured a
breakdown in activity in certain financial markets, such as the markets for asset-backed securities,
commercial paper, and interbank lending, and the failure (or government rescue to avoid failure)
of several large, established financial firms. Since then, financial conditions have improved but
have not completely returned to normal. Beginning in the fourth quarter of 2008, disruptions in
financial markets resulted in significant declines in business investment. Given the lag between
changes in financial conditions and economic activity, it is less surprising that the recession was
so much longer than average. In a study of historical recessions in industrial countries, the IMF
found that recessions associated with financial crises lasted an average of seven months longer,
although the decline in GDP was not statistically significant from other recessions. 15
Comparisons Between the Recent Recession and the
Great Depression
Some commentators have suggested that the financial crisis of the recent recession makes the
Great Depression a more relevant comparison than the other post-war recessions. While the
current financial downturn has been the most severe in the post-war period by many measures,
there are many differences between the recent situation and the Great Depression. Although the
stock market crash of 1929 played a role in setting the economic downturn in motion, there is a
consensus among economists that policy errors caused the downturn to become the Great
Depression. 16 Among the most important errors were the Fed’s failure to counteract the
contraction in the money supply, which caused overall prices to fall a cumulative 25%, and bank
runs, which caused thousands of banks to fail. (The money supply fell primarily in order to
maintain the gold standard, and the economic growth rate was high after the United States
abandoned the gold standard.)
By contrast, policymakers have responded aggressively and unconventionally to attempt to
contain the current crisis. The Fed has reduced short-term interest rates to nearly zero. Direct Fed
assistance outstanding to the financial system has exceeded $1 trillion, and Congress authorized
Treasury to provide an additional $700 billion to the financial system through the Troubled Assets
Relief Program. 17 Widespread bank runs have not occurred since the introduction of deposit
insurance in the 1930s, and similar runs on money market mutual funds in 2008 were
15
International Monetary Fund, World Economic Outlook, Washington, DC, April 2009, p. 111. See also Carmen
Reinhart and Kenneth Rogoff, “The Aftermath of Financial Crises,” National Bureau of Economic Research, working
paper no. 14656 (January 2009).
16
For an overview, see Ben Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach,”
Journal of Money, Credit, and Banking, vol. 27, no. 1 (February 1995).
17
For more information, see CRS Report R41427, Troubled Asset Relief Program (TARP): Implementation and Status,
by Baird Webel.
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The 2007-2009 Recession: Similarities to and Differences from the Past
circumvented when Treasury temporarily guaranteed their principal. The Federal Deposit
Insurance Corporation (FDIC) also temporarily guaranteed certain bank debt to ensure that banks
would not lose access to borrowing markets.18
During the Great Depression, policymakers were also reluctant to stimulate the economy through
fiscal expansion (a larger structural budget deficit).19 By contrast, the budget deficit increased as a
share of GDP from 1.2% in 2007 to 10% in 2009. There was also a belief among some
policymakers at the time that recessions were healthy processes that purged the economy of
inefficiently allocated resources—a view that fell out of favor as the Depression worsened, and
was eventually replaced by the view that prudent policy changes could avoid the needless waste
of resources laid idle by recessions.
The Great Depression included two recessions, with the first lasting 3½ years and the second,
beginning four years later, lasting another year. As deep as the recent recession was, it was mild
compared with the first contraction of the Great Depression, as shown in Table 3.20 The changes
in GDP, prices, and unemployment in the recent recession were much closer to those experienced
in other post-war recessions than the Great Depression.
Table 3. Comparing the First Contraction of the Great Depression
to the Recent Recession
Cumulative Change Rise in Unemployment Cumulative Change
in Output Rate in Prices
1929 to 1933 -26.7% 3.2% to 25.2% -25.5%
2007:Q4 to 2009:Q2 -4.1% 5.0% to 9.5% 2.5%
Source: CRS calculations based on data from the Bureau of Economic Analysis and Department of Commerce,
Historical Statistics of the United States, 1975.
Notes: Quarterly data are not available for the 1920s and 1930s, so annual data are used. Inflation measured
using the gross domestic product deflator.
Author Contact Information
Marc Labonte
Specialist in Macroeconomic Policy
[email protected], 7-0640
18
For more information, see CRS Report R41073, Government Interventions in Response to Financial Turmoil, by
Baird Webel and Marc Labonte.
19
Much of the increase in the budget deficit during the Great Depression was caused by falling revenues due to the
Depression, rather than the introduction of new policy measures that were deficit-financed. The structural budget
deficit refers to the budget deficit that would occur in the absence of changes in economic conditions.
20
Quarterly data do not exist for the 1920s and 1930s. Percent changes for annual data compare the mid-point of the
current year to the mid-point of the previous year.
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