A recession is a decline in economic activity
for a period of at least half a year.
The world has seen several recessions of varying degrees.
Every part of the human inhabitable world has
experienced a recession at a point of history.
Compared to the underdeveloped and developing countries, the
developed nations usually fall into definitive recession.
Some recessions are of long duration like the Great
Depression, while some are less severe economic crises.
There are many causes for a recession.
Economists around the world use different techniques to predict the recession.
Also, there are many indicators to establish
an economic condition as a recession.
A recession can have long-lasting impacts on human lives.
It can affect different dimensions of society.
There are also many economists who are of the opinion
that recessions are a normal part of an economic cycle.
Something that provides an opportunity to take
remedial measures and bring in innovations.
A recession is a negative GDP growth for two consecutive quarters.
Some recessions affect only some countries, while some are more global in nature.
Early recessions in America can be dated back to 1785.
The cause of early recessions was mainly the lack of strong currency.
Loss of confidence in copper coins resulted in the panic of 1789.
An embargo against Britain and France resulted in the recession of 1807.
Post the Napoleonic wars, Europe and the US experienced recessions.
There was a reduction in international trade.
In the US, unregulated banking, hard currency deficits, agrarian
land bubble, reduction of exports, etc. caused the recession.
This period saw the establishment of Second Bank of
United States which will lose its charter in 1836.
Till 1863 there was no central banking system in the US.
That led to several banking panics.
The circumvention of the Bank Charter Act created panic in the UK in 1857.
The fall of several railroad companies and banks led to a recession in the US.
A depression that affected many parts of the world
before the Great Depression is the Long Depression.
Demonetization of silver thaler coins by Germany and Coinage
Act in the US resulted in the price fall of silver.
With a shortage of gold, there was a decrease in monetary reserves.
Reduced lending and high-interest rates put many railroad companies under loss.
This period also witnessed the crash of NYSE, Vienna Stock Exchange,
Paris Bourse stock market.
The long depression ended in 1896.
Change from a wartime economy to a peacetime
economy caused mild recession post World War1.
Then the world went through the Great Depression starting from 1929.
This double dip depression lasted till 1938 with intermittent periods of expansion.
The major event in this depression is the Wall Street Crash of 1929.
Dow Jones closed at 89% loss in 1932.
Businesses lost the money invested in the stock market and went bankrupt.
Debt defaults led to the closure of several banks.
Conservative lending that followed further declined the economy.
Unemployment reached a record high.
The Tariff Act resulted in a decrease in international trade.
Heavy industries in Britain were hit hard.
Germany also was affected.
Latin American countries that depend on the exports to the US were widely impacted.
The increase in government spending by the New Deal brought into
effect by President Roosevelt boosted economy to some extent.
The real boost was the Second World War which created thousands of military jobs.
The first major recession after World War II was the 1973-75 recession.
The main reasons for that were the oil embargo imposed
by the OPEC countries and dollar devaluation.
This period saw stagflation.
The 1981-82 recession was also related to the
increase in oil prices due to the Iraq-Iran war.
The 1990s was that of growth to America.
But Japan’s economy started to decline.
The period from 1991-2010 is called a Lost Score in Japan.
The appreciation of Yen led to the Endaka recession in 1985.
Monetary easing was adopted to curb the appreciation.
Real estate was booming so much in Japan's cities that the commercial land
price increased by 122% in Tokyo in 1986 compared to the previous year.
To curb the general inflation, interest rates were cut.
That led to the stock market crash and the bursting of the asset bubble.
Banks were in crisis.
With their home and land prices fallen, people became conservative spenders.
Long term deflation, a decline in GDP and low wages followed.
The economy remained stagnant.
There were some short-lived stock market crashes in the early 2000s.
These were the result of dot com bubble bursts and 9/11 attacks.
The next global recession called as the Great Recession
started in 2007 end and continued till mid-2009.
The main factor that led to this was subprime mortgage lending by the US banks.
An increasing number of mortgages were delinquent or in foreclosing.
The global financial institutions that purchased the Mortgage Backed Securities
faced huge loss and limited their lending capacity all over the world.
This combined with the debt defaults resulted in
the fall of banking giants like Lehmann Brothers.
Many investment banks were bailed out by the government.
Unemployment reached the maximum in US and UK after the World War II.
The country that got affected the worst is Greece.
Started in 2009, it is still under the debt crisis.
The Eurozone entry and the resulting monetary inflexibility
undermined the competitive edges that it had before.
Trade deficit resulted.
The underreporting of the previous debts resulted
in social exclusion and a further limit in lending.
Receiving bailouts multiple times from IMF and austerity measures that put
the civilians under difficulties didn't help them to pay off the debts.
Recessions have long-lasting impacts.
It can bring economic, social and political changes to society.