You Put Your Hands Upon My Hip

Then you dip, I dip, we dip! All this talk of a possible “double-dip” recession got me thinking: Have we ever faced something so economically scary? It turns out we have. Many times.

Considering it has been 26 months since the current anemic recovery began, and fingernails are getting shorter with each new report on the economy, I checked for recessions in the US separated by less than 30 months:

• Depression of 1807-1810 followed by recession of 1812
• Recession of 1812 followed by depression of 1815–1821
• Depression of 1815-1821 followed by recession of 1822-1823
• Recession of 1822-1823 followed by recession of 1825-1826
• Recession of 1825-1826 followed by recession of 1828-1829
• Recession of 1833-1834 followed by recession of 1836-1838*
• Recession of 1836-1838* followed by recession of 1839-1843*
• Recession of 1839-1843* followed by recession of 1845-1846
• Recession of 1845-1846 followed by recession of 1847-1848…

*Taken together, these 6 years represented the longest Depression in history following Jackson’s short-lived pay-off of the debt.

Well, you get the picture. It goes on and on like this until the 20th century. Since the Great Depression ended, there have only been two instances of recessions recurring in a time frame less than 30 months. The first occurred as an 8-month recession lasting into 1958 was followed by a 10-month recession beginning in 1960. The second one is more interesting, though, given its similarity to the current circumstances.

The president residing over the downward turn in the economy inherited a terrible economy with little time for things to turn around as his precedent had only replaced the Fed Chairman, and thus monetary policy, 18 months before he took office. When things are a mess it takes a while to turn it around. This is why he decided to keep the preceding executive’s Chairman and policies like Obama did following his election when there had been only 6 months action before taking office since the “Great Recession” was not even acknowledged until nearly a year after it began. 

Unemployment was a little higher in the 2nd double-dip recession of the century than it is today, but still close enough to call it apples to apples. The country faced high energy prices and crises overseas, though no declared war, and government regulation of business was a center issue. American manufacturing faced a crisis and a government bailout was required to save the automobile sector.

If you haven’t guessed already, the last double-dip recession occurred under Ronald Reagan. Following the 6-month recession of 1980, Reagan entered office & decided to keep Carter 1979 appointee Paul Volcker, who had been implementing a plan of deregulation under Carter to nurture the economy away from approaching calamity. He also took a lot of heat for raising the federal funds rate to attack stagflation. In the end, his efforts worked to curtail inflation from a peak of 13.5% under Reagan in 1981 to 3.2% by 1983 and interest rates would follow it back down.

It took more than 3 years for Volcker policies to have enough impact to pull the economy into an extended recovery. Reagan decided to make a change in 1987 when Volcker thought deregulation had gone far enough and moderation was needed. That August he named Allen Greenspan, who was friendly to Reagan’s approach of removing most forms of regulation,  Chairman of the Fed.

Three years later, the first George Bush was dealing with a recession of his own.