In 1797, the English economy took a nosedive.  The Bank of England struggled mightily and its problems found their way across the Atlantic to their remaining colonial possessions and one of their former colonies, the young United State of America.  The US real estate market went on the skids.  Only twenty-one years removed for the Revolutionary War, the US was experiencing its first of many recessions.

Recessions, which are basically prolonged (more than two quarters in a fiscal year) economic contractions are an expected event.  If you look at the numbers from the folks at the National Bureau of Economic Research, you can see that the economy doesn’t always steadily climb the growth chart.

Although every recession has its own unique characteristics and impacts, there’s something almost comforting about knowing we’ve made it through these downturns in the past.  This may be the first time some of us have really felt the punch of a recession, but it doesn’t take long to realize that others have been through the fight before.

The Great Depression was the 11th (and most damaging) recession in US history.  It’s also the best-known of the bunch because of its severity.  It wasn’t, however, the longest-lasting downturn.  The so-called “Long Depression” actually spanned a whopping 23 years.  That’s right, 23 (1873–1896).

In the years following the Great Depression, the business cycle has had recessionary dips on more than eight other occasions, including our current predicament.

We’ve talked about our current economic challenges a lot lately.  Let’s take a minute to consider some of the other non-depression recessions of the last fifty-plus years.  

In 1953, the Fed clamped down on inflationary pressures subsequent to the conclusion of US involvement in the Korean War.  That was enough to spur a recession.  

Four years later, the US experienced the Recession of 1957.  Historians blame the easing of tight monetary policies and lower-than-anticipated tax revenues relative to GDP for the a downturn.

Another four year gap, another recession.  In 1961, the US experienced a brief recession.  Although I’m sure that many Americans felt the impact of this slowdown, it doesn’t get a great deal of attention in historical terms.  A Time article from the period places the blame on the fact that businesses weren’t adding to inventory, particularly in terms of durable goods and manufacturing basics.  The cause of those decisions isn’t mentioned.

1973 and 1974 weren’t great years, economically speaking.  The US was ramping up defense spending to fund the Viet Nam War (some argue this was not a factor in setting off the slowdown) and OPEC maneuvers more than tripled the price of oil.  The stock market took a tumble and a new word entered the economic lexicon:  stagflation.

In 1980, the US discovered that having Ayatollah Khomeini running Iran was bad for the US economy.  The Shah’s successor, following the revolution there, didn’t just hold US citizens hostage.  He did the same with oil.  Production and distribution were up and down affairs.  When the black gold did flow, the price was higher than ever.  Back on the homefront, the Fed was tightening monetary policy in an effort to stave off greater inflation.  Recession ensued.

In 1990/1991, we experienced another recession.  Again, people are ready to point a finger at monetary policy as a cause.  Restrictive monetary policy is considered a key contributor to this recession.

In 2001, recession made another visit to the headlines.  Although recessionary circumstances existed prior to September 11, 2001, it’s impossible not to recognize the role the tragedy had in proloning the downturn.  Enron’s shenanigans and market corrections in the previously fast-growing Internet sector didn’t help either.

That brings us up to now.  

They say that studing history is a great way to avoid the repetition of error.  There are common elements in some of the recessions we’ve experienced–tight monetary policy an global oil market instability both jump right out at you.  

It’s hard to generalize, though.  Each recession involved a unique set of circumstances and many of the policies that may have contributed to disaster on some occasions probably prevented recessions during other times.

If you can find the common thread, the underlying and correctable cause of recession, make your findings known immediately!  We could all use the information.  Until someone manages to isolate that “root cause”, I’m going to subscribe to the belief that variances due to the natural corrections inherent in a market-based economy are the real source of recessions.  

It’s cyclical.  Let’s just hope our current cycle is approaching its conclusion.