2-minute read
Happy holidays to you and yours!
Happy holidays my friend!
I took a stroll down holiday memory lane and dug up this gem from 2007:
Holy bowl cut!
I’ll have to introduce you to Jim Carrey’s barber.[1]
Oh, the good ol’ days.
Don’t tell Time Magazine that:[2]
December 2007? I guess Time Magazine wasn’t feeling the holiday spirit.
Guess that was a sign of things to come.
For Putin?
No – for the whole world. Does the year 2008 stand out to you at all?
Uhh…
The Great Financial Crisis ring a bell?
Ah yes, that’s right.
You know, the funny thing is that I had the same exact reaction at the time. Pure and blissful ignorance.
Wasn’t that the best?
Over the next 12+ months 3.8 million homes were foreclosed on in the US, 1 in 10 Americans were out of work, and $14 trillion of stock value was lost.[3][4][5]
And we had no idea.
Zero. I had my panties in a bunch over making the JV basketball team. Meanwhile, my dad was up at night thinking where his next career may be.
Do you always relive economic calamities around the holidays?
Typically, no.
Then what is with the recession talk?
I realized the other day that I have never experienced a true recession in my adult life. I’m in no hurry, but it’s an honest curiosity.[6]
It’s a fair point. We get accustomed to restaurants being packed, standby queues on flights, friends and family gainfully employed, etc. What’s it like when that’s not the case?
I really don’t know.
Can you imagine if 10% of your friends were unemployed? Or worse yet if you were part of the 10%?
The “good” news is that not every recession is created equal. The Great Financial Crisis was god awful, but others were less damaging.
Easy for you to say Mr. Economic Expansion.
True, but it’s a good reminder. Here are the previous recessions dating back to World War II:[7][8]
U.S. Recession | Dates | Peak Unemployment |
Post-War Recession | November 1948 – October 1949 | 7.9% |
Post-Korean War Recession | July 1953 – May 1954 | 6.1% |
Eisenhower Recession | August 1957 – April 1958 | 7.7% |
“Rolling Adjustment” Recession | April 1960 – February 1961 | 7.1% |
Nixon Recession | December 1969 – November 1970 | 5.9% |
Oil Shock Recession | November 1973 – March 1975 | 8.8% |
Energy Crisis I Recession | January – July 1980 | 7.8% |
Energy Crisis II Recession | July 1981 – November 1982 | 10.8% |
Gulf War Recession | July 1990 – March 1991 | 6.8% |
Dot Com Recession | March – November 2001 | 5.5% |
2008 Great Financial Crisis | December 2007 – June 2009 | 10.0% |
Average: 11 months | Average: 7.7% |
Those must feel like a looooong 11 months.
Not to mention how much money you lose in the market:
U.S. Recession | S&P 500 Peak-to-Trough Decline |
Post-War Recession | -20.6% |
Post-Korean War Recession | -14.8% |
Eisenhower Recession | -20.7% |
“Rolling Adjustment” Recession | -13.9% |
Nixon Recession | -36.1% |
Oil Shock Recession | -48.2% |
Energy Crisis I Recession | -17.1% |
Energy Crisis II Recession | -27.1% |
Gulf War Recession | -19.9% |
Dot Com Recession | -49.1% |
2008 Great Financial Crisis | -56.8% |
Average: -31.3% |
Ugh, just ugh.
We experience a recession every 7 years on average. It has been 17 years since my bowl cut![9]
Don’t play with the economic gods like that!
I know, I know. But the truth is we’ll experience several recessions. Some will be sledgehammers, others will be a slap on the wrist. They will all have one thing in common: they will end.
I just wonder how terrible it’ll feel.
In the end, it’s like many things in life. You just have to experience it for yourself.
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[1] Jim Carrey from the film Dumb and Dumber.
[2] Time Magazine cover; date: December 31, 2007.
[3] Source: https://www.chicagofed.org/publications/chicago-fed-letter/2016/370#:~:text=As%20a%20result%20of%20the,were%20approximately%203.8%20million%20foreclosures.
[4] Source: https://www.bls.gov/opub/mlr/2018/article/great-recession-great-recovery.htm#:~:text=the%20Great%20Recession.-,Unemployment,lowest%20reading%20since%20December%202000.
[5] Source: https://www.theguardian.com/business/2008/dec/31/shares-markets-record-losses#:~:text=year%20on%20record-,This%20article%20is%20more%20than%2016%20years%20old,badly%20as%20the%20economy%20worsened.
[6] There was technically a COVID recession from February-April 2020. Considering its brevity, I am not considering it a recession for the sake of this conversation.
[7] Source: https://www.weatherlyassetmgt.com/a-brief-history-of-u-s-recessions/
[8] Source: https://www.self.inc/info/history-of-us-recessions/#:~:text=4%5D-,Average%20peak%20unemployment%20during%20recessions,U.S.%20unemployment%20rate%20on%20record.
[9] Source: https://barnumfinancialgroup.com/historical-facts-about-recessions/#:~:text=The%20U.S.%20has%20experienced%2013,contributed%20to%20the%20economic%20decline.