Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch.
The history of recessions in the United States shows that they are a natural, though painful, part of the business cycle. The National Bureau of Economic Research determines when a recession starts and ends.
The Bureau of Economic Analysis measures the gross domestic product (GDP) that defines recessions. The Bureau of Labor Statistics reports on the unemployment rate. Unemployment often peaks after the recession ends because it is a lagging economic indicator. Most employers wait until they are sure the economy is back on its feet again before hiring permanent employees.
There have been 19 noteworthy recessions throughout U.S. history.
21st Century Recessions
In its first decade, the 21st century experienced three recessions. Each was worse than the one before, but for different reasons.
2020 Recession
The 2020 recession was the worst since the Great Depression. The U.S. economy contracted a record 31.4% in the second quarter, after falling 5% in the previous quarter.
The Covid-19 pandemic forced businesses to close and families to shelter-in-place.
In April 2020, the U.S. economy lost an astonishing 20.8 million jobs, sending the unemployment rate skyrocketing to 14.7%. It remained in the double-digits until August. Uncertainty over the pandemic’s impact also caused the 2020 stock market crash.
The Federal Reserve lowered the fed funds rate to 0%, promising to keep it there until 2023. Congress issued more than $2 trillion in aid. Although the economy grew 33.1% in the third quarter, it was not enough to make up for earlier losses.
2008–09
The Great Recession lasted from December 2007 to June 2009, the longest contraction since the Great Depression. The subprime mortgage crisis triggered a global bank credit crisis in 2007. By 2008, the damage had spread to the general economy through the widespread use of derivatives.
GDP in 2008 shrank in three quarters, including an 8.4% drop in Q4. The unemployment rate rose to 10% in October 2009, lagging behind the recession that caused it. The recession ended in Q3 2009, when GDP turned positive, thanks to an economic stimulus package.