US Economic Downturns 1929-2009

Event: Great Depression (1929-1941)
Cause: Worldwide collapse, US Banking Collapse, Over extension of Credit, Overproduction of consumer goods
Government Response: The Hoover Administration attempted to pump money into businesses, raised taxes (income tax hit 63%), and raised tariffs. FDR launched the New Deal which included massive government spending, income tax rates up to 89% and new excise taxes on things ranging from gas to movie tickets.
Results: Hoover made the depression worse. FDR’s programs saved the banks, but the New Deal may have prolonged the depression. People began using a barter economy to escape taxation.
How it ended: Japan bombed Pearl Harbor

Event: Recession of 1937-1939
Cause: A series of labor strikes crippled the economy.
Government Response: More spending & a rhetorical campaign by FDR
Results: The stimulus failed.
How it ended: The economy began to recover with the increase in military expenditures and an end of the labor strikes.

Event: Recession of 1953-1954
Cause: End of the Korean War led to a cut in industrial production & fed policy
Government Response: None
Results: Economy recovered on its own
How it ended: Economy recovered and began to boom.

Event: Recession of 1957-1958
Cause: Worldwide downturn; Fed policy
Government Response: None
Results: Economy recovered on its own
How it ended: Economy recovered on its own

Event: Recession of 1960-1961
Cause: Fed Policy
Government Response: V.P. Nixon pushed for a looser fed policy to increase credit; Ike refused. JFK cut taxes.
Results: Long period of growth
How it ended: Tax cuts and later military spending led to a boom.

Event: Recession of 1973-74
Cause: Arab oil embargo, end of military expenditures with end of Vietnam War, stagnated wages as a result of the Great Society
Government Response: Wage and Price Controls
Results: Led to stagflation
How it ended: The economy came around, but remained sketchy for the remainder of the decade as a result of a number of factors including the energy crisis, government action under Ford and Carter, and The Great Society.

Event: Recession of 1979-1982
Cause: Iranian Revolution led to an energy crisis, fed monetary policy, the cost of Great Society programs, and general government mismanagement.
Government Response: Carter attacked the American people in the malaise speech, deregulation, tight fed policy, increased social spending. Reagan cut taxes and increased military spending.
Results: Carter’s policies led to hyperinflation and the misery index. Reagan’s led to an economic boom.
How it ended: Deregulation under both Carter and Reagan worked. Both deserve credit for saving Chrysler Corp. Reagan’s tax and military policies led to a boom. The energy crisis ended as the Middle East stabilized following the Iranian Revolution.

Event: Recession of 1990-1991
Cause: Cuts in military spending, a tax increase, spike in oil prices due to Gulf War, and S&L Crisis.
Government Response: Bush raised taxes and put the country on the course for a balanced budget. The private sector adapted.
Results: The recession was over relatively quickly, but the general public did not realize it until mid-1993.
How it ended: The private sector adapted. Tech boom.

Event: Recession of 2000-2001
Cause: Tech bubble burst, a series of business scandals, and 911
Government Response: Clinton did nothing. Bush cut taxes.
Results: The economy survived and boomed for a short time.
How it ended: Tax cuts kept the economy afloat.

Event: The current downturn (2007-present)
Cause: Collapse of housing market, bank failures, over extension of credit due to government interference, high energy prices, and a worldwide downturn.
Government Response: Under Bush, Fed loosened monetary policy, bailouts, and stimulus plans. Under Obama, increased government spending and tax increases.
Results: Thus far, the recession has deepened and since Obama’s election, the stock market has lost 20% of its value.
How it ended: ????