How Long Do Recessions Last?

Readers Question: How Long do Recessions last?

There is no exact answer. Recessions can last for varying time lengths depending on the causes and also the response of Governments and consumers.

The great Depression.

The Great Depression which started after the wall street crash in 1929, lasted for several years in the UK and US. The length of the recession was due to several factors including:

• Government’s seeking to balance budget by increasing taxes
• Negative Multiplier effect
• Global slowdown in trade
• Lack of economic stimulus

See also: The Great Depression

In recent years, recessions in the UK and US have lasted for shorter time periods.

UK recession 1981 was severe for manufacturing recession, but lasted less than a year. However, unemployment persisted at close to 3 million for another 5 years.

UK recession of 1991  -lasted less than 12 months, but was longer than necessary due to government attempt to stay in ERM

Japanese Recession of 1990s and 2000s

Throughout the 1990s and early 2000s the Japanese economy experienced period of recession and very sluggish periods of growth. Technically, the economy was not always in recession because it was expanding very slowly, but it felt like a recession because cofidence was very low and growth extremely limited. This was mainly because of deflation - falling prices which make growth very difficult.

How Long will the current recession last?

As of yet, the US economy has not officially entered into recession. However, growth is definitely slowing down. The length of the upcoming US recession may depend on how long US house prices keep falling. Also the FED have aggressively cut interest rates hoping to stave off a recession.

 See also

Why Recessions last a long time 

Paradox of Thrift - Why people in a recession often save, but this makes the recession last longer