The question on a lot of peoples’ minds is when the next recession will take place. Our international political economy class was wondering the same thing. So we decided to look at that very question, using a little economic history.
Using data from the National Bureau of Economic Research (http://www.nber.org/cycles/cyclesmain.html), we found that the average economic growth length since the NBER started calculating this information (back in 1854) has been 38.73 months.
So how long have we been growing the economy? The growth spurt began back in June of 2009, 43 months, so you could say we’re overdue for a recession. In fact, LaGrange College undergraduates Matt James and Kristoffer Appel found that the economy has already begun to contract (http://www.guardian.co.uk/business/2013/jan/30/us-economy-surprise-shrink?INTCMP=SRCH and http://politicalticker.blogs.cnn.com/2013/01/30/u-s-economy-contracts-for-first-time-since-recession/).
Our “Great Recession” lasted 18 months. It sure seemed like a long time, but the average recession length was 17.455 months. So it was pretty close to the mean.
“What I found so interesting about our findings in class was that the US has actually been out of recession for 3+ years,” noted Appel. “Sometimes the media makes it seem like the economy is in constant recession. However, that does not mean that these aren’t troubling times economically. But it was interesting to compare the ‘Great Recession’ to other recessions in the history of this country. 2009 does not seem as terrifying in that aspect.”
It wouldn’t be the first time we’ve underestimated how well things were going, or how badly an economic downturn was. For example, we had four recessions which began in the “Gay Nineties” (1890s) and the “Roaring 1920s” as well as two in the 1950s.
As LaGrange College undergraduate Oscar Prim wrote “I thought it was an interesting fact that during years of prosperity, the United States had so many recessions. Then after reading some more about unemployment, I learned that providing more jobs doesn’t mean the unemployment rating won’t go up.”
Perhaps that’s why the unemployment rate ticked up even as the economy added jobs http://www.ibj.com/us-economy-adds-jobs-but-unemployment-rate-rises/PARAMS/article/39405. The two measure something different. One tracks jobs added while the other follows filing claims http://www.forecast-chart.com/forecast-unemployment-rate.html.
“Although American economists have indicated that America has entered another recession I do not believe that citizens should be worried,” writes James. “I agree with Annalyn Kurtz’s explanation of the recession. The mandatory spending cuts on January 1, 2013 and the plateau of defense spending are contributing to the economic slowdown. America is seeing growth in the housing sector which was the cornerstone for America’s economy during the Clinton and Bush administration. I believe if Americans do not hit the panic button and ride out the recession over the next year and a half that the U.S. will continue to recover.”
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