Top 10 Worst Economic Recessions/Depressions in the US
Although there is debate on how many recessions the US has been through, the consensus on how these recessions are caused is fairly clear. Declines in production, consumption, investment, and banking are major culprits in these situations, and sometimes they lead to the dragging down of international economies as well (more often now than before). The dates presented on this list earlier than the mid-19th century are mostly debatable, and rates of deflation, unemployment, and other financial struggles are most likely not 100% accurate since these factors were not consistently recorded until the 20th century. It’s mostly up to you to decide which of these recessions were worse than others.
It is clear that this tops the list. Banking panics, excessive tariffs, and other factors led to one of the steepest declines the US economy has ever seen. Production slowed down, unemployment rates skyrocketed, international trade was halted, and there seemed little hope of recovery.
This event affected not only the USA but really the entire world.
The most recent entry occurred between 2007 and 2009 and resulted in the greatest GDP decline since 1945. The subprime mortgage crisis led to failures in housing-related assets and the collapse of several financial institutions, most famously Lehman Brothers. Stocks plummeted, and the government responded with a bank bailout and a stimulus package.
This period technically encompassed two recessions. Increases in interest rates led to higher unemployment rates. Additionally, an oil crisis fueled inflation rates, which the US struggled to combat.
The Long Depression, beginning with the Panic of 1873, lasted until 1879. The largest bank in the US collapsed, the Coinage Act of 1873 harmed the mining industry, and deflation and wage cuts led to labor turmoil, including the Great Railroad Strike of 1877.
There was widespread failure from banks to crops. The cotton market completely collapsed, speculative practices fell when banks stopped using specie payments, and unemployment skyrocketed.
Following World War I, deflation rates decreased tremendously. Along with it came a significant decline in production. Despite being rather short, the recession was nevertheless a painful experience.
To be fair, it was immediately followed by "The Roaring '20s."
Following the Great Depression, more economic turmoil ensued. Tight fiscal policies after the New Deal and tight monetary policies from the Federal Reserve, along with declining profits, led businesses to suffer.
It began as a failure in the railroad and banking industries due to a speculative bubble bursting. The Panic then led to over 5,000 businesses failing, along with widespread unemployment and protests.
Following the War of 1812, rapid inflation occurred that the US struggled to manage. After a panic in 1815 came another in 1819, sparking a widespread crisis. Banks failed, real estate prices collapsed, industries slumped, and the economy was bleak.
As I speak, the COVID-19 outbreak has led to shutdowns across the globe. However, no shutdown has been as disastrous as those in the US. The lack of proper procedures to prevent the spread of the virus has resulted in businesses shutting down, the stock market crashing, and unemployment rates rising closer to the peak of the Great Depression. Additionally, nearly 200,000 people have died due to COVID-19.
After the Civil War, the US entered a period of deflation. Financial difficulties and instabilities continued into the Reconstruction Era, and business activity decreased rapidly.