Recession of 1958

Last updated

The Recession of 1958, also known as the Eisenhower Recession, was a sharp worldwide economic downturn in 1958. [1] The effect of the recession spread beyond United States borders to Europe and Canada, causing many businesses to shut down. [2] It was the most significant recession during the post-World War II boom between 1945 and 1970 and had a sharp economic decline that only lasted eight months. By the time recovery began in May 1958, most lost ground had been regained. As 1958 ended, the economy was heading towards new high levels of employment and production. Overall, the recession was regarded as a moderate one based on the duration and extent of declines in employment, production, and income. [1]

Contents

Causes

There were many major factors in the decline that exerted a growing downward pressure on production and employment, resulting in a general reduction of economic activity. [1]

Consequences

Price and costs

Government actions

Government efforts to promote a prompt economic recovery played an important role in the moderation of the recession. Dwight D. Eisenhower, Raymond J. Saulnier, Robert B. Anderson, and Lyndon B. Johnson were some of the important figures playing major roles in this effort. Eisenhower's main focus was to stimulate recovery while keeping the government's financial “house in order”. [3]

By the end of the recession, the index of industrial production was 142% of the 1947 to 1949 average. Total employment had increased by about 1 million from its recession low while unemployment had been reduced by 1 million. Income and expenditures of individuals were at new high levels. Gross National Product, the broadest measure of the nation's output of goods and services, had risen to an annual rate of $453 billion. [1]

Officially, recessionary circumstances lasted from the middle of 1957 to April 1958. [3]

Related Research Articles

In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale natural or anthropogenic disaster. In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.

Unemployment People without work and actively seeking work

Unemployment, according to the Organisation for Economic Co-operation and Development (OECD), is persons above a specified age not being in paid employment or self-employment but currently available for work during the reference period.

Causes of the Great Depression overview about the possible causes of the Great Depression

The causes of the Great Depression in the early 20th century have been extensively discussed by economists and remain a matter of active debate. They are part of the larger debate about economic crises and recessions. The specific economic events that took place during the Great Depression are well established. There was an initial stock market crash that triggered a "panic sell-off" of assets. This was followed by a deflation in asset and commodity prices, dramatic drops in demand and credit, and disruption of trade, ultimately resulting in widespread unemployment and impoverishment. However, economists and historians have not reached a consensus on the causal relationships between various events and government economic policies in causing or ameliorating the Depression.

The early 1990s recession describes the period of economic downturn affecting much of the Western world in the early 1990s, believed to be caused by restrictive monetary policy enacted by central banks primarily in response to inflation concerns, the loss of consumer and business confidence as a result of the 1990 oil price shock, the end of the Cold War and the subsequent decrease in defense spending, the savings and loan crisis and a slump in office construction resulting from overbuilding during the 1980s. The global GDP growth returned to normal by 1994. The impacts of the recession included the resignation of Canadian prime minister Brian Mulroney, reduction of active companies by 15% and unemployment up to nearly 20% in Finland, civil disturbances in the United Kingdom and the growth of discount stores in the United States and beyond.

Household debt

Household debt is defined as the combined debt of all people in a household. It includes consumer debt and mortgage loans. A significant rise in the level of this debt coincides historically with many severe economic crises and was a cause of the U.S. and subsequent European economic crises of 2007–2012. Several economists have argued that lowering this debt is essential to economic recovery in the U.S. and selected Eurozone countries.

This article covers the development of Spain's economy over the course of its history.

Great Depression in the United States Period in American history

The Great Depression began with the Wall Street Crash in October 1929. The stock market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth as well as for personal advancement. Altogether, there was a general loss of confidence in the economic future.

Recession of 1937–1938 Economic downturn that occurred during the Great Depression in the United States

The recession of 1937–1938 was an economic downturn that occurred during the Great Depression in the United States.

The early 1980s recession was a severe economic recession that affected much of the world between approximately the start of 1980 and early 1983. It is widely considered to have been the most severe recession since World War Two. A key event leading to the recession was the 1979 energy crisis, mostly caused by the Iranian Revolution which caused a disruption to the global oil supply, which saw oil prices rising sharply in 1979 and early 1980. The sharp rise in oil prices pushed the already high rates of inflation in several major advanced countries to new double-digit highs, with countries such as the United States, Canada, West Germany, Italy, the United Kingdom and Japan tightening their monetary policies by increasing interest rates in order control the inflation. These G7 countries each, in fact, had "double-dip" recessions involving short declines in economic output in parts of 1980 followed by a short period of expansion, in turn followed by a steeper, longer period of economic contraction starting sometime in 1981 and ending in the last half of 1982 or in early 1983. Most of these countries experienced stagflation, a situation of both high interest rates and high unemployment rates.

Recession of 1953 In the U.S., began in the second quarter of 1953 and lasted until the first quarter of 1954

In the United States the Recession of 1953 began in the second quarter of 1953 and lasted until the first quarter of 1954. The total recession cost roughly $56 billion. It has been described by James L. Sundquist, a staff member of the Bureau of the Budget and speech-writer for President Harry S. Truman as "relatively mild and brief."

Great Depression worldwide economic depression starting in the United States, lasting from 1929 to the end of the 1930s

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across the world; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. The Great Depression is commonly used as an example of how intensely the global economy can decline.

Depression of 1920–1921

The Depression of 1920–1921 was a sharp deflationary recession in the United States, United Kingdom and other countries, beginning 14 months after the end of World War I. It lasted from January 1920 to July 1921. The extent of the deflation was not only large, but large relative to the accompanying decline in real product.

The initial economic collapse which resulted in the Great Depression can be divided into two parts: 1929 to mid-1931, and then mid-1931 to 1933. The initial decline lasted from mid-1929 to mid-1931. During this time, most people believed that the decline was merely a bad recession, worse than the recessions that occurred in 1923 and 1927, but not as bad as the Depression of 1920-21. Economic forecasters throughout 1930 optimistically predicted an economic rebound come 1931, and felt vindicated by a stock market rally in the spring of 1930.

1973–1975 recession Period of economic stagnation in the Western world

The 1973–1975 recession or 1970s recession was a period of economic stagnation in much of the Western world during the 1970s, putting an end to the overall Post–World War II economic expansion. It differed from many previous recessions by being a stagflation, where high unemployment and high inflation existed simultaneously.

Unemployment in the United States An explanation of unemployment in the United States, presently and historically

Unemployment in the United States discusses the causes and measures of U.S. unemployment and strategies for reducing it. Job creation and unemployment are affected by factors such as economic conditions, global competition, education, automation, and demographics. These factors can affect the number of workers, the duration of unemployment, and wage levels.

The Great Recession in the United States was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output. This slow recovery was due in part to households and financial institutions paying off debts accumulated in the years preceding the crisis along with restrained government spending following initial stimulus efforts. It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis.

The United States entered recession in 1990, which lasted 8 months through March 1991. Although the recession was mild relative to other post-war recessions, it was characterized by a sluggish employment recovery, most commonly referred to as a jobless recovery. Unemployment continued to rise through June 1992, even though economic growth had returned the previous year.

Early 1980s recession in the United States Economic recession

The United States entered recession in January 1980 and returned to growth six months later in July 1980. Although recovery took hold, the unemployment rate remained unchanged through the start of a second recession in July 1981. The downturn ended 16 months later, in November 1982. The economy entered a strong recovery and experienced a lengthy expansion through 1990.

The early 1990s recession saw a period of economic downturn affect much of the world in the late 1980s and early 1990s. The economy of Australia suffered its worst recession since the Great Depression.

Causes of unemployment in the United States

Job creation and unemployment are affected by factors such as aggregate demand, global competition, education, automation, and demographics. These factors can affect the number of workers, the duration of unemployment, and wage rates.

References

  1. 1 2 3 4 5 6 7 8 9 "The Economic Report of the President" (PDF). Monthly Labor Review. The American Presidency Project. U.S. Government Printing Office. 82 (3): 1–225. 1959. Retrieved 20 Oct 2014.
  2. 1 2 3 "The Recession of 1958 - Photo Essays". January 1, 2008. Retrieved November 5, 2014.
  3. 1 2 3 4 5 6 7 8 9 10 11 McClenahan, William M.; Becker, William H. (2011). Eisenhower and the Cold War Economy. Baltimore: Johns Hopkins University Press. ISBN   978-1-4214-0265-9.

Further reading