The U.S. has not endured a deep and prolonged recession in more than a quarter century – enough time for many Americans to forget what one feels like.
But unlike the last two relatively short recessions, this one could be much longer and more severe, potentially bringing with it anxiety and job losses not seen in many years.
“In thinking about recessions, people will naturally think back to the last couple” in the early 1990s and in 2001, said Paul Ashworth, senior U.S. economist at Capital Economics in Toronto. “What they should be looking back at is further.”
That requires dredging up memories of the economic slides in the 1970s, when an Arab oil embargo starved the nation of energy, and the early 1980s, when unemployment and inflation soared.
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The last recession – coinciding with the collapse of the tech stock bubble and the terrorist attacks of 2001 – lasted just eight months.
The current slump started with the collapse in the housing market and got worse with sharp restrictions on credit. That is a different environment from 1973, when an oil crisis was the culprit. In the early 1980s, raging inflation and high interest rates took their toll.
Both periods saw millions of Americans out of work. In 1975, unemployment peaked at 9 percent. In 1982, it jumped to 10.8 percent.
Most economists forecast a sharp increase in the number of people expected to lose jobs, but not on the scale of either the 1970s or 1980s.
The jobless rate is currently at 6.1 percent, and many economists expect it to rise to about 7 percent early next year – a level the country has not seen since 1993. Some analysts believe the unemployment rate could eventually climb close to 8 percent, which hasn't happened since 1984.
But this slump could begin to feel like those of the past because of fear about the future.
In the 1980s, as the nation struggled with inflation and a transition from a manufacturing economy to one based on services, Americans had “a huge amount of uncertainty and anxiety that lingered on for a long period of time,” said Bart Van Ark, chief economist for The Conference Board.
“That element I find comparable to what we're seeing today, but some of the underlying dynamics are very, very different.”
A recession is typically defined as a period in which the economy shrinks for two quarters in a row. In the 2001 recession, the quarters weren't even consecutive.
But in the 1970s, the recession stretched on for a year and a half. Nearly 2.2 million people lost their jobs. By the end of 1974, the Dow Jones industrial average had lost more than 40 percent of its value.
The economy began to recover in spring of the next year. But inflation, which had eased as the oil embargo was lifted, spiked again. By 1980, prices were rising at an annual rate of 13.5 percent.
The next recession did not come until 1990, as preparations for the Gulf War drove up the price of oil. But the 1.6 million jobs lost was much less severe than in the previous downturn, and this one lasted for just eight months.
The next recession, in early 2001, was similarly short-lived.