Understanding American Recessions: What History Teaches Us

A clear look at economic downturns and what they mean for your financial future

What Exactly Is a Recession?

Let's start with the basics. A recession isn't just a bad month or two for the economy. It's officially declared by the National Bureau of Economic Research (NBER) – a nonprofit organization that tracks these things for a living. They look at various economic indicators, but GDP (Gross Domestic Product) is their go-to measure.

Here's the key point: they don't call it a recession until months after it's already started. They need enough data to be certain. So when you hear "we're in a recession," we've actually been in one for a while.

The Big Picture: Recessions Are Getting Shorter

Here's something that might surprise you: we're actually getting better at handling recessions.

From 1855 to 2020, the average recession lasted 17 months. But if we focus on the 20th and 21st centuries, that number drops to 14 months. We're learning, adapting, and our economic tools are improving.

Some Eye-Opening Numbers

According to recent analysis by Voronoi using NBER data, let me put this in perspective with some real numbers:

The longest recession in U.S. history ran for 65 months – that's over five years – from October 1873 to March 1879. Imagine dealing with economic hardship for that long.

Since World War II, we've experienced 13 recessions. That's roughly one every six years, which tells us they're more common than many people realize.

The Great Recession (2007-2009) was our longest downturn since WWII, lasting about 18 months. It felt much longer when you were living through it.

The COVID-19 recession was our shortest on record – just two months from February to April 2020. The speed of government response made a huge difference.

What This Means for You

Understanding recession history isn't just academic – it's practical. Here are the key takeaways:

Recessions are normal. They've been happening for over 150 years. They're part of the economic cycle, not signs that the sky is falling.

They don't last forever. Even the worst recession in modern history (the Great Depression era, which lasted from September 1929 to March 1933) eventually ended.

We're getting better at managing them. Modern monetary policy, faster government response, and better economic understanding help us recover more quickly.

The Bottom Line

Economic downturns can feel overwhelming when you're in the middle of one. But history shows us that recessions, while challenging, are temporary. The economy has always recovered, often stronger than before.

The best approach? Stay informed, but don't panic. Build your financial resilience during good times, and remember that even the longest recession eventually becomes a historical footnote.

Understanding this history doesn't eliminate the stress of economic uncertainty, but it does provide valuable perspective. We've been here before, and we've always found our way through.

Sources of Information*:

Voronoi App: "A History of American Recessions"

National Bureau of Economic Research (NBER) recession data

*These organizations are not affiliated with IFG. IFG does not endorse, support, or recommend any information that is not provided by its affiliates or representatives.

⚠️Disclaimer:

Information provided is for informational purposes only, and does not constitute a financial advise, an offer or solicitation to sell, a solicitation of an offer to buy, any security or any other product or service. Accordingly, this document does not constitute investment advice or counsel or solicitation for investment in any security. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.