Conditions During Recession
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Stock Market
S&P 500 Index - 90 Year Historical Chart. Shade areas mean recession periods https://www.macrotrends.net/2324/sp-500-historical-chart-data
- Market Bottoms have always happen after recession have already started
- Largest market corrections and recoveries have happened during inflationary periods.
- FED rate cuts are usually follow by a market correction and not a rally.
| Recession[1][2] | Start Date | End Date | GDP Decline | Unemployment Peak[3] | Inflation Peak[4] | Federal debt to GDP[5] | S&P 500 from Recession Start to bottom[6] | Date of Botton | Federal Funds Rate Pivot | S&P 500 from FED Pivot to bottom | S&P 500 from Peak to Bottom | Notes |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| The Great Depression[7] | Aug-29 | Mar-33 | -29% | 25% | 1.17% | -82.22% | Jun-32 | -82.22% | ||||
| The Roosevelt Recession [8] | May-37 | Jun-38 | -10% | 20.0% | 5.10% | 51.0% | -46.00% | Mar-38 | -53.01% | |||
| The Union Recession | Feb-45 | Oct-45 | -10.9% | 3.8% | 13.19% | 115.0% | -25.83% | Feb-48 | -42.53% | Stock market crash -42% was mostly right after the recession, investors were not expecting too much growth after the war. But due to the huge fiscal spending, there was an increase in inflation and growth. | ||
| The Post-War Recession | Nov-48 | Oct-49 | -1.7% | 7.9% | 19.67% | 92.0% | -12.00% | Jun-49 | -42.86 | Stock market crash between 1945 and 1948 recessions | ||
| The Post-Korean War Recession | Jul-53 | May-54 | -2.7% | 5.9% | 9.30% | 69.0% | -6.12% | Aug-53 | -12.76 | |||
| The Eisenhower Recession | Aug-57 | Apr-58 | -3.7% | 7.4% | 3.70% | 57.5% | -11.87% | Dec-57 | Nov-57 | -4.15% | -21.89% | |
| The “Rolling Adjustment” Recession | Apr-60 | Feb-61 | -1.6 | 6.9% | 1.73% | 53.0% | -2.80% | Oct-80 | May-60 | -5.34% | -13.55% | |
| The Guns and Butter Recession | Dec-69 | Nov-70 | -0.60% | 5.9% | 6.17% | 35.5% | -23.25% | Jun-70 | Mar-70 | -20.11% | -38.77 | |
| The Oil Embargo Recession | Nov-73 | Mar-75 | -3% | 8.6% | 12.34% | 32.0% | -39.94% | Sep-74 | Jul-74 | -21.79% | -54.80% | |
| The Iran and Volcker Recession | Jan-80 | Jul-80 | -2.20% | 7.8% | 14.73% | 31.8% | -13.14% | Mar-80 | May-80 | 20.86% to next peak | -30.97% | |
| Double-Dip Recession | Jul-81 | Nov-82 | -2.90% | 10.8% | 10.95% | 37.8% | -23.13% | Jul-82 | Aug-81 (There was an early intent of rate cuts in Feb-81) | -17.41% | -33.17% | 1980 and 1981 are usually combined in the same cycle, where inflation remained elevated. |
| The Gulf War Recession | Jul-90 | Mar-91 | -1.50% | 6.8% | 6.29% | 58.5% | -16.64% | Oct-90 | May-89 | -12.06% | -19.27% | |
| The Dot-Com Recession | Mar-01 | Nov-01 | -0.30% | 5.5% | 3.73% | 54.5% | -31.59% | Sep-02 | Dec-00 | -45.54% | -48.72% | |
| The Great Recession | Dec-07 | Jun-09 | -4.30% | 9.5% | 5.60% | 67.6% | -50.43% | Feb-09 | Sep-07 | -52.69% | -53.28% | |
| The COVID-19 Recession | Feb-20 | Apr-20 | -31.20% | 14.7% | 2.49% | 127.8% | -12.29% | Mar-20 | Aug-19 | -12.21% | -20.34% | |
| Average | -17.60% | 9.77% | 7.74% | 63.07% | -26.48% | -17.04% | -37.88% |
FED easing conditions
2019 rate cuts [9]
In July 31, 2019 the fed decided to start a series of rate cuts, their reason was weak global growth and the US-China trade war that had been disruptive for the world economy and had an impact on growth in America. The committee called the current state of growth “moderate” and the labor market “strong,” but decided to loosen policy anyway. They did 2 more rate cuts in 2019 after this one, and when COVID emergency hit, they took the fed funds rate to the zero bound again.
Along with the rate cut, the committee decided to end the reduction of bonds it is holding on its balance sheet.
2007 rate cuts
2000 rate cuts
Unemploment
- Unemployment is a lagging indicator, peak unemployment usually after or at recthe ession end
- Low unemployment is a usual characteristic of late cycle, right before a recession
References
- ↑ https://www.netsuite.com/portal/resource/articles/business-strategy/economic-recessions-history.shtml
- ↑ https://www.investopedia.com/articles/economics/08/past-recessions.asp
- ↑ https://www.bls.gov/opub/mlr/2018/images/data/haugen-figure1.stm
- ↑ https://fred.stlouisfed.org/series/CPIAUCNS#0
- ↑ https://fred.stlouisfed.org/series/GFDGDPA188S
- ↑ https://www.macrotrends.net/2324/sp-500-historical-chart-data
- ↑ https://www.stlouisfed.org/the-great-depression/curriculum/economic-episodes-in-american-history-part-3#:~:text=The%20U.S.%20economy%20shrank%20by,%25%3B%20wholesale%20prices%20plummeted%2032%25.
- ↑ https://www.federalreservehistory.org/essays/recession-of-1937-38
- ↑ https://www.cnbc.com/2019/07/31/fed-cuts-rates-by-a-quarter-point.html