Through the last 80 years of U.S. history there have been a total of 15 official recessions including the current which began last December, 2007. By comparing all fifteen investors can attain a much deeper understanding of the unraveling financial crisis. Is this latest calamity really as bad as we think?
The answer is yes.
When comparing all 15 recessions of the past 80 years the ongoing recession we face today already ranks number 6 on the list. Furthermore with economists predicting the current recession to last well into 2009 we may quickly find ourselves in the second worst recession since the Great Depression.
Below are the top 10 worst recessions of the last 80 years ranked by official duration.
- 1929-1933, 43 months in duration (Great depression).
- 1981-1982, 16 months in duration.
- 1973-1975, 16 months in duration.
- 1937-1938, 13 months in duration.
- 1926-1927, 13 months in duration.
- 2007-2008, 12 months in duration.*
- 1970, 11 months in duration.
- 1948-1949, 11 months in duration.
- 1960-1961, 10 months in duration.
- 1953-1954, 10 months in duration.
* – Current Recession officially began December 2007 and based on current market data has not yet concluded.
The following chart from Fidelity gives a very clear breakdown of all 15 recessions, their duration, and severity as far as market damage during and after the recession ended (hat tip Barry from the Big Picture).
If the current recession continues into the second quarter of 2009 the United States will be able to officially declare it as the worst since the Great Depression.
Luckily for us investors recessions are not ranked by total government spending during that respective period. The difference between billions and trillions is a bit more steep than comparing total months.
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