Yesterday we learned that the recession that began in December 2007 now has an official end date — June 2009. In other words, nearly sixteen months later, we now know that the recession ended at midnight on May 31st.
In light of our recent recession experience, let’s get some perspective on recessions in United States history. Here’s a one-question multiple-choice exam:
Over the 109 years since the beginning of the 20th century, what percentage of the time has the US been in recession?
The sad reality is that “D” gets you an “A” on this exam. The good news, however, is evident in the chart, which shows the real (inflation-adjusted) market performance and all recessions since 1871 as defined by the National Bureau of Economic Research (NBER).
During those nearly 14 decades, the United States has been in recession 29.8% of the time. Fortunately the economic conditions have gradually improved over this timeframe:
- 1871-1900: Recessions = 48.3% of the time
- 1901-1950: Recessions = 36.8% of the time
- 1951-2010: Recessions = 15.2% of the time
At 18 months duration, the latest recession was the longest since that 43-month monster during Great Depression — August 1929 to March 1933. It was a grim reminder of what used to be a fairly common economic reality in US history. Let’s hope we see several years of expansion before the next recession.
Note: For those who prefer a nominal chart of the market: