{"id":1049,"date":"2017-08-04T21:00:49","date_gmt":"2017-08-04T21:00:49","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/chapter\/19-3-tracking-real-gdp-over-time\/"},"modified":"2023-10-27T02:19:54","modified_gmt":"2023-10-27T02:19:54","slug":"19-3-tracking-real-gdp-over-time","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/chapter\/19-3-tracking-real-gdp-over-time\/","title":{"raw":"Chapter 3 - Tracking Real GDP over Time","rendered":"Chapter 3 &#8211; Tracking Real GDP over Time"},"content":{"raw":"<div class=\"bcc-box bcc-highlight\">\r\n<h3>Learning Objectives<\/h3>\r\n<div>By the end of this section, you will be able to:<\/div>\r\n<div>\r\n<ul>\r\n \t<li>Explain recessions, depressions, peaks, and troughs<\/li>\r\n \t<li>Evaluate the importance of tracking real GDP over time<\/li>\r\n \t<li>Analyze the impact of economic fluctuations on a country\u2019s output and price level<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/div>\r\n<p id=\"fs-idp94661760\">When news reports indicate that \u201cthe economy grew 1.2% in the first quarter,\u201d the reports are referring to the percentage change in real GDP. By convention, GDP growth is reported at an annualized rate: Whatever the calculated growth in real GDP was for the quarter, it is multiplied by four when it is reported as if the economy were growing at that rate for a full year.<\/p>\r\n\r\n<figure id=\"CNX_Econ_C19_008\">\r\n<div class=\"title\">\r\n<div class=\"title\"><\/div>\r\n<\/div>\r\n<figcaption>\r\n\r\n[caption id=\"\" align=\"aligncenter\" width=\"235\"]<img src=\"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-content\/uploads\/sites\/157\/2017\/08\/CNX_Econ_C19_008.jpg\" alt=\"The graph illustrates that both real GDP and real GDP per capita have substantially increased since 1900.\" width=\"235\" height=\"155\" \/> <strong>Figure 1.<\/strong> U.S. GDP, 1900\u20132014. Real GDP in the United States in 2014 was about $16 trillion. After adjusting to remove the effects of inflation, this represents a roughly 20-fold increase in the economy\u2019s production of goods and services since the start of the twentieth century. (Source: <a href=\"http:\/\/www.bea.gov\">bea.gov<\/a>)[\/caption]\r\n\r\n<\/figcaption><\/figure>\r\n<p id=\"fs-idp4304016\"><a class=\"autogenerated-content\" href=\"#CNX_Econ_C19_008\">Figure 1<\/a> shows the pattern of U.S. real GDP since 1900. The generally upward long-term path of GDP has been regularly interrupted by short-term declines. A significant decline in real GDP is called a <strong>recession<\/strong>. An especially lengthy and deep recession is called a <strong>depression<\/strong>. The severe drop in GDP that occurred during the <strong class=\"no-emphasis\">Great Depression<\/strong> of the 1930s is clearly visible in the figure, as is the <strong class=\"no-emphasis\">Great Recession<\/strong> of 2008\u20132009.<\/p>\r\n<p id=\"fs-idp75162576\">Real GDP is important because it is highly correlated with other measures of economic activity, like employment and unemployment. When real GDP rises, so does employment.<\/p>\r\n<p id=\"fs-idp2371200\">The most significant human problem associated with recessions (and their larger, uglier cousins, depressions) is that a slowdown in production means that firms need to lay off or fire some of the workers they have. Losing a job imposes painful financial and personal costs on workers, and often on their extended families as well. In addition, even those who keep their jobs are likely to find that wage raises are scanty at best\u2014or they may even be asked to take pay cuts.<\/p>\r\n<p id=\"fs-idm76443104\"><a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a> lists the pattern of recessions and expansions in the U.S. economy since 1900. The highest point of the economy, before the recession begins, is called the <strong>peak<\/strong>; conversely, the lowest point of a recession, before a recovery begins, is called the <strong>trough<\/strong>. Thus, a recession lasts from peak to trough, and an economic upswing runs from trough to peak. The movement of the economy from peak to trough and trough to peak is called the <strong>business cycle<\/strong>. It is intriguing to notice that the three longest trough-to-peak expansions of the twentieth century have happened since 1960. The most recent recession started in December 2007 and ended formally in June 2009. This was the most severe recession since the Great Depression of the 1930\u2019s.<\/p>\r\n\r\n<table id=\"Table_19_09\" summary=\"The table shows the pattern of recessions and expansions in the U.S. economy since 1900. Column 1 lists the Trough dates. Column 2 lists the Peak dates. Column 3 lists the Months of Contraction. Column 4 lists the Months of Expansion. Trough: December 1900; Peak: September 1902; 18 (months of contraction); 21 (months of expansion). Trough: August 1904; Peak: May 1907; 23 (months of contraction); 33 (months of expansion). Trough: June 1908; Peak: January 1910; 13 (months of contraction); 19 (months of expansion). Trough: January 1912; Peak: January 1913; 24 (months of contraction); 12 (months of expansion). Trough: December 1914; Peak: August 1918; 23 (months of contraction); 44 (months of expansion). Trough: March 1919; Peak: January 1920; 7 (months of contraction); 10 (months of expansion). Trough: July 1921; Peak: May 1923; 18 (months of contraction); 22 (months of expansion). Trough: July 1924; Peak: October 1926; 14 (months of contraction); 27 (months of expansion). Trough: November 1927; Peak: August 1929; 23 (months of contraction); 21 (months of expansion). Trough: March 1933; Peak: May 1937; 43 (months of contraction); 50 (months of expansion). Trough: June 1938; Peak: February 1945; 13 (months of contraction); 80 (months of expansion). Trough: October 1945; Peak: November 1948; 8 (months of contraction); 37 (months of expansion). Trough: October 1949; Peak: July 1953; 11 (months of contraction); 45 (months of expansion). Trough: May 1954; Peak: August 1957; 10 (months of contraction); 39 (months of expansion). Trough: April 1958; Peak: April 1960; 8 (months of contraction); 24 (months of expansion). Trough: February 1961; Peak: December 1969; 10 (months of contraction); 106 (months of expansion). Trough: November 1970; Peak: November 1973; 11 (months of contraction); 36 (months of expansion). Trough: March 1975; Peak: January 1980; 16 (months of contraction); 58 (months of expansion). Trough: July 1980; Peak: July 1981; 6 (months of contraction); 12 (months of expansion). Trough: November 1982; Peak: July 1990; 16 (months of contraction); 92 (months of expansion). Trough: March 2001; Peak: November 2001; 8 (months of contraction); 120 (months of expansion). Trough: December 2007; Peak: June 2009; 18 (months of contraction); 73 (months of expansion).\">\r\n<thead>\r\n<tr>\r\n<th>Trough<\/th>\r\n<th>Peak<\/th>\r\n<th>Months of Contraction<\/th>\r\n<th>Months of Expansion<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>December 1900<\/td>\r\n<td>September 1902<\/td>\r\n<td>18<\/td>\r\n<td>21<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>August 1904<\/td>\r\n<td>May 1907<\/td>\r\n<td>23<\/td>\r\n<td>33<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>June 1908<\/td>\r\n<td>January 1910<\/td>\r\n<td>13<\/td>\r\n<td>19<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>January 1912<\/td>\r\n<td>January 1913<\/td>\r\n<td>24<\/td>\r\n<td>12<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>December 1914<\/td>\r\n<td>August 1918<\/td>\r\n<td>23<\/td>\r\n<td>44<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>March 1919<\/td>\r\n<td>January 1920<\/td>\r\n<td>7<\/td>\r\n<td>10<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 1921<\/td>\r\n<td>May 1923<\/td>\r\n<td>18<\/td>\r\n<td>22<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 1924<\/td>\r\n<td>October 1926<\/td>\r\n<td>14<\/td>\r\n<td>27<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>November 1927<\/td>\r\n<td>August 1929<\/td>\r\n<td>23<\/td>\r\n<td>21<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>March 1933<\/td>\r\n<td>May 1937<\/td>\r\n<td>43<\/td>\r\n<td>50<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>June 1938<\/td>\r\n<td>February 1945<\/td>\r\n<td>13<\/td>\r\n<td>80<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>October 1945<\/td>\r\n<td>November 1948<\/td>\r\n<td>8<\/td>\r\n<td>37<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>October 1949<\/td>\r\n<td>July 1953<\/td>\r\n<td>11<\/td>\r\n<td>45<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>May 1954<\/td>\r\n<td>August 1957<\/td>\r\n<td>10<\/td>\r\n<td>39<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>April 1958<\/td>\r\n<td>April 1960<\/td>\r\n<td>8<\/td>\r\n<td>24<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>February 1961<\/td>\r\n<td>December 1969<\/td>\r\n<td>10<\/td>\r\n<td>106<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>November 1970<\/td>\r\n<td>November 1973<\/td>\r\n<td>11<\/td>\r\n<td>36<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>March 1975<\/td>\r\n<td>January 1980<\/td>\r\n<td>16<\/td>\r\n<td>58<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 1980<\/td>\r\n<td>July 1981<\/td>\r\n<td>6<\/td>\r\n<td>12<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>November 1982<\/td>\r\n<td>July 1990<\/td>\r\n<td>16<\/td>\r\n<td>92<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>March 2001<\/td>\r\n<td>November 2001<\/td>\r\n<td>8<\/td>\r\n<td>120<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>December 2007<\/td>\r\n<td>June 2009<\/td>\r\n<td>18<\/td>\r\n<td>73<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"4\"><strong>Table 9.<\/strong> U.S. Business Cycles since 1900. (Source: <a href=\"http:\/\/www.nber.org\/cycles\/main.html\">http:\/\/www.nber.org\/cycles\/main.html<\/a>)<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p id=\"fs-idp29009152\">A private think tank, the <strong class=\"no-emphasis\">National Bureau of Economic Research (NBER)<\/strong>, is the official tracker of business cycles for the U.S. economy. However, the effects of a severe recession often linger on after the official ending date assigned by the NBER.<\/p>\r\n\r\n<section id=\"fs-idp17544032\" class=\"summary\">\r\n<h1>Key Concepts and Summary<\/h1>\r\n<p id=\"fs-idm24831088\">Over the long term, U.S. real GDP have increased dramatically. At the same time, GDP has not increased the same amount each year. The speeding up and slowing down of GDP growth represents the business cycle. When GDP declines significantly, a recession occurs. A longer and deeper decline is a depression. Recessions begin at the peak of the business cycle and end at the trough.<\/p>\r\n\r\n<\/section><section id=\"fs-idp158656\" class=\"self-check-questions\">\r\n<div class=\"bcc-box bcc-info\">\r\n<h3>Self-Check Questions<\/h3>\r\n<ol>\r\n \t<li id=\"fs-idm16923200\">Without looking at <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, return to <a class=\"autogenerated-content\" href=\"#CNX_Econ_C19_008\">Figure 1<\/a>. If a recession is defined as a significant decline in national output, can you identify any post-1960 recessions in addition to the recession of 2008\u20132009? (This requires a judgment call.)<\/li>\r\n \t<li id=\"fs-idp23154320\">According to <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, how often have recessions occurred since the end of World War II (1945)?<\/li>\r\n \t<li id=\"fs-idp33642496\">According to <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, how long has the average recession lasted since the end of World War II?<\/li>\r\n \t<li id=\"fs-idp91448576\">According to <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, how long has the average expansion lasted since the end of World War II?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/section><section id=\"fs-idp54008768\" class=\"review-questions\"><\/section><section id=\"fs-idp1212272\" class=\"critical-thinking\">\r\n<div class=\"bcc-box bcc-info\">\r\n<h3>Critical Thinking Questions<\/h3>\r\n<ol>\r\n \t<li id=\"fs-idp5245536\">Why do you suppose that U.S. GDP is so much higher today than 50 or 100 years ago?<\/li>\r\n \t<li id=\"fs-idp967696\">Why do you think that GDP does not grow at a steady rate, but rather speeds up and slows down?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/section><section id=\"fs-idm81210160\" class=\"references\">\r\n<h1>References<\/h1>\r\n<p id=\"fs-idm26865680\">The National Bureau of Economic Research. \u201cInformation on Recessions and Recoveries, the NBER Business Cycle Dating Committee, and related topics.\u201d http:\/\/www.nber.org\/cycles\/main.html.<\/p>\r\n\r\n<\/section>\r\n<div>\r\n<h2>Glossary<\/h2>\r\n<dl id=\"fs-idp4290944\" class=\"definition\">\r\n \t<dt>business cycle<\/dt>\r\n \t<dd id=\"fs-idp3873088\">the relatively short-term movement of the economy in and out of recession<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idp27754240\" class=\"definition\">\r\n \t<dt>depression<\/dt>\r\n \t<dd id=\"fs-idp10759360\">an especially lengthy and deep decline in output<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idp26586384\" class=\"definition\">\r\n \t<dt>peak<\/dt>\r\n \t<dd id=\"fs-idm87433472\">during the business cycle, the highest point of output before a recession begins<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idp3736448\" class=\"definition\">\r\n \t<dt>recession<\/dt>\r\n \t<dd id=\"fs-idm14196896\">a significant decline in national output<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idp1056848\" class=\"definition\">\r\n \t<dt>trough<\/dt>\r\n \t<dd id=\"fs-idm42687872\">during the business cycle, the lowest point of output in a recession, before a recovery begins<\/dd>\r\n<\/dl>\r\n<\/div>\r\n<div class=\"bcc-box bcc-info\">\r\n<h3>Solutions<\/h3>\r\n<strong>Answers to Self-Check Questions<\/strong>\r\n<ol>\r\n \t<li id=\"fs-idp157584\">Two other major recessions are visible in the figure as slight dips: those of 1973\u20131975, and 1981\u20131982. Two other recessions appear in the figure as a flattening of the path of real GDP. These were in 1990\u20131991 and 2001.<\/li>\r\n \t<li id=\"fs-idp523936\">11 recessions in approximately 70 years averages about one recession every six years.<\/li>\r\n \t<li id=\"fs-idp7320672\">The table lists the \u201cMonths of Contraction\u201d for each recession. Averaging these figures for the post-WWII recessions gives an average duration of 11 months, or slightly less than a year.<\/li>\r\n \t<li id=\"fs-idp16084880\">The table lists the \u201cMonths of Expansion.\u201d Averaging these figures for the post-WWII expansions gives an average expansion of 60.5 months, or more than five years.<\/li>\r\n<\/ol>\r\n<\/div>","rendered":"<div class=\"bcc-box bcc-highlight\">\n<h3>Learning Objectives<\/h3>\n<div>By the end of this section, you will be able to:<\/div>\n<div>\n<ul>\n<li>Explain recessions, depressions, peaks, and troughs<\/li>\n<li>Evaluate the importance of tracking real GDP over time<\/li>\n<li>Analyze the impact of economic fluctuations on a country\u2019s output and price level<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p id=\"fs-idp94661760\">When news reports indicate that \u201cthe economy grew 1.2% in the first quarter,\u201d the reports are referring to the percentage change in real GDP. By convention, GDP growth is reported at an annualized rate: Whatever the calculated growth in real GDP was for the quarter, it is multiplied by four when it is reported as if the economy were growing at that rate for a full year.<\/p>\n<figure id=\"CNX_Econ_C19_008\">\n<div class=\"title\">\n<div class=\"title\"><\/div>\n<\/div><figcaption>\n<figure style=\"width: 235px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-content\/uploads\/sites\/157\/2017\/08\/CNX_Econ_C19_008.jpg\" alt=\"The graph illustrates that both real GDP and real GDP per capita have substantially increased since 1900.\" width=\"235\" height=\"155\" \/><figcaption class=\"wp-caption-text\"><strong>Figure 1.<\/strong> U.S. GDP, 1900\u20132014. Real GDP in the United States in 2014 was about $16 trillion. After adjusting to remove the effects of inflation, this represents a roughly 20-fold increase in the economy\u2019s production of goods and services since the start of the twentieth century. (Source: <a href=\"http:\/\/www.bea.gov\">bea.gov<\/a>)<\/figcaption><\/figure>\n<\/figcaption><\/figure>\n<p id=\"fs-idp4304016\"><a class=\"autogenerated-content\" href=\"#CNX_Econ_C19_008\">Figure 1<\/a> shows the pattern of U.S. real GDP since 1900. The generally upward long-term path of GDP has been regularly interrupted by short-term declines. A significant decline in real GDP is called a <strong>recession<\/strong>. An especially lengthy and deep recession is called a <strong>depression<\/strong>. The severe drop in GDP that occurred during the <strong class=\"no-emphasis\">Great Depression<\/strong> of the 1930s is clearly visible in the figure, as is the <strong class=\"no-emphasis\">Great Recession<\/strong> of 2008\u20132009.<\/p>\n<p id=\"fs-idp75162576\">Real GDP is important because it is highly correlated with other measures of economic activity, like employment and unemployment. When real GDP rises, so does employment.<\/p>\n<p id=\"fs-idp2371200\">The most significant human problem associated with recessions (and their larger, uglier cousins, depressions) is that a slowdown in production means that firms need to lay off or fire some of the workers they have. Losing a job imposes painful financial and personal costs on workers, and often on their extended families as well. In addition, even those who keep their jobs are likely to find that wage raises are scanty at best\u2014or they may even be asked to take pay cuts.<\/p>\n<p id=\"fs-idm76443104\"><a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a> lists the pattern of recessions and expansions in the U.S. economy since 1900. The highest point of the economy, before the recession begins, is called the <strong>peak<\/strong>; conversely, the lowest point of a recession, before a recovery begins, is called the <strong>trough<\/strong>. Thus, a recession lasts from peak to trough, and an economic upswing runs from trough to peak. The movement of the economy from peak to trough and trough to peak is called the <strong>business cycle<\/strong>. It is intriguing to notice that the three longest trough-to-peak expansions of the twentieth century have happened since 1960. The most recent recession started in December 2007 and ended formally in June 2009. This was the most severe recession since the Great Depression of the 1930\u2019s.<\/p>\n<table id=\"Table_19_09\" summary=\"The table shows the pattern of recessions and expansions in the U.S. economy since 1900. Column 1 lists the Trough dates. Column 2 lists the Peak dates. Column 3 lists the Months of Contraction. Column 4 lists the Months of Expansion. Trough: December 1900; Peak: September 1902; 18 (months of contraction); 21 (months of expansion). Trough: August 1904; Peak: May 1907; 23 (months of contraction); 33 (months of expansion). Trough: June 1908; Peak: January 1910; 13 (months of contraction); 19 (months of expansion). Trough: January 1912; Peak: January 1913; 24 (months of contraction); 12 (months of expansion). Trough: December 1914; Peak: August 1918; 23 (months of contraction); 44 (months of expansion). Trough: March 1919; Peak: January 1920; 7 (months of contraction); 10 (months of expansion). Trough: July 1921; Peak: May 1923; 18 (months of contraction); 22 (months of expansion). Trough: July 1924; Peak: October 1926; 14 (months of contraction); 27 (months of expansion). Trough: November 1927; Peak: August 1929; 23 (months of contraction); 21 (months of expansion). Trough: March 1933; Peak: May 1937; 43 (months of contraction); 50 (months of expansion). Trough: June 1938; Peak: February 1945; 13 (months of contraction); 80 (months of expansion). Trough: October 1945; Peak: November 1948; 8 (months of contraction); 37 (months of expansion). Trough: October 1949; Peak: July 1953; 11 (months of contraction); 45 (months of expansion). Trough: May 1954; Peak: August 1957; 10 (months of contraction); 39 (months of expansion). Trough: April 1958; Peak: April 1960; 8 (months of contraction); 24 (months of expansion). Trough: February 1961; Peak: December 1969; 10 (months of contraction); 106 (months of expansion). Trough: November 1970; Peak: November 1973; 11 (months of contraction); 36 (months of expansion). Trough: March 1975; Peak: January 1980; 16 (months of contraction); 58 (months of expansion). Trough: July 1980; Peak: July 1981; 6 (months of contraction); 12 (months of expansion). Trough: November 1982; Peak: July 1990; 16 (months of contraction); 92 (months of expansion). Trough: March 2001; Peak: November 2001; 8 (months of contraction); 120 (months of expansion). Trough: December 2007; Peak: June 2009; 18 (months of contraction); 73 (months of expansion).\">\n<thead>\n<tr>\n<th>Trough<\/th>\n<th>Peak<\/th>\n<th>Months of Contraction<\/th>\n<th>Months of Expansion<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>December 1900<\/td>\n<td>September 1902<\/td>\n<td>18<\/td>\n<td>21<\/td>\n<\/tr>\n<tr>\n<td>August 1904<\/td>\n<td>May 1907<\/td>\n<td>23<\/td>\n<td>33<\/td>\n<\/tr>\n<tr>\n<td>June 1908<\/td>\n<td>January 1910<\/td>\n<td>13<\/td>\n<td>19<\/td>\n<\/tr>\n<tr>\n<td>January 1912<\/td>\n<td>January 1913<\/td>\n<td>24<\/td>\n<td>12<\/td>\n<\/tr>\n<tr>\n<td>December 1914<\/td>\n<td>August 1918<\/td>\n<td>23<\/td>\n<td>44<\/td>\n<\/tr>\n<tr>\n<td>March 1919<\/td>\n<td>January 1920<\/td>\n<td>7<\/td>\n<td>10<\/td>\n<\/tr>\n<tr>\n<td>July 1921<\/td>\n<td>May 1923<\/td>\n<td>18<\/td>\n<td>22<\/td>\n<\/tr>\n<tr>\n<td>July 1924<\/td>\n<td>October 1926<\/td>\n<td>14<\/td>\n<td>27<\/td>\n<\/tr>\n<tr>\n<td>November 1927<\/td>\n<td>August 1929<\/td>\n<td>23<\/td>\n<td>21<\/td>\n<\/tr>\n<tr>\n<td>March 1933<\/td>\n<td>May 1937<\/td>\n<td>43<\/td>\n<td>50<\/td>\n<\/tr>\n<tr>\n<td>June 1938<\/td>\n<td>February 1945<\/td>\n<td>13<\/td>\n<td>80<\/td>\n<\/tr>\n<tr>\n<td>October 1945<\/td>\n<td>November 1948<\/td>\n<td>8<\/td>\n<td>37<\/td>\n<\/tr>\n<tr>\n<td>October 1949<\/td>\n<td>July 1953<\/td>\n<td>11<\/td>\n<td>45<\/td>\n<\/tr>\n<tr>\n<td>May 1954<\/td>\n<td>August 1957<\/td>\n<td>10<\/td>\n<td>39<\/td>\n<\/tr>\n<tr>\n<td>April 1958<\/td>\n<td>April 1960<\/td>\n<td>8<\/td>\n<td>24<\/td>\n<\/tr>\n<tr>\n<td>February 1961<\/td>\n<td>December 1969<\/td>\n<td>10<\/td>\n<td>106<\/td>\n<\/tr>\n<tr>\n<td>November 1970<\/td>\n<td>November 1973<\/td>\n<td>11<\/td>\n<td>36<\/td>\n<\/tr>\n<tr>\n<td>March 1975<\/td>\n<td>January 1980<\/td>\n<td>16<\/td>\n<td>58<\/td>\n<\/tr>\n<tr>\n<td>July 1980<\/td>\n<td>July 1981<\/td>\n<td>6<\/td>\n<td>12<\/td>\n<\/tr>\n<tr>\n<td>November 1982<\/td>\n<td>July 1990<\/td>\n<td>16<\/td>\n<td>92<\/td>\n<\/tr>\n<tr>\n<td>March 2001<\/td>\n<td>November 2001<\/td>\n<td>8<\/td>\n<td>120<\/td>\n<\/tr>\n<tr>\n<td>December 2007<\/td>\n<td>June 2009<\/td>\n<td>18<\/td>\n<td>73<\/td>\n<\/tr>\n<tr>\n<td colspan=\"4\"><strong>Table 9.<\/strong> U.S. Business Cycles since 1900. (Source: <a href=\"http:\/\/www.nber.org\/cycles\/main.html\">http:\/\/www.nber.org\/cycles\/main.html<\/a>)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p id=\"fs-idp29009152\">A private think tank, the <strong class=\"no-emphasis\">National Bureau of Economic Research (NBER)<\/strong>, is the official tracker of business cycles for the U.S. economy. However, the effects of a severe recession often linger on after the official ending date assigned by the NBER.<\/p>\n<section id=\"fs-idp17544032\" class=\"summary\">\n<h1>Key Concepts and Summary<\/h1>\n<p id=\"fs-idm24831088\">Over the long term, U.S. real GDP have increased dramatically. At the same time, GDP has not increased the same amount each year. The speeding up and slowing down of GDP growth represents the business cycle. When GDP declines significantly, a recession occurs. A longer and deeper decline is a depression. Recessions begin at the peak of the business cycle and end at the trough.<\/p>\n<\/section>\n<section id=\"fs-idp158656\" class=\"self-check-questions\">\n<div class=\"bcc-box bcc-info\">\n<h3>Self-Check Questions<\/h3>\n<ol>\n<li id=\"fs-idm16923200\">Without looking at <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, return to <a class=\"autogenerated-content\" href=\"#CNX_Econ_C19_008\">Figure 1<\/a>. If a recession is defined as a significant decline in national output, can you identify any post-1960 recessions in addition to the recession of 2008\u20132009? (This requires a judgment call.)<\/li>\n<li id=\"fs-idp23154320\">According to <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, how often have recessions occurred since the end of World War II (1945)?<\/li>\n<li id=\"fs-idp33642496\">According to <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, how long has the average recession lasted since the end of World War II?<\/li>\n<li id=\"fs-idp91448576\">According to <a class=\"autogenerated-content\" href=\"#Table_19_09\">Table 9<\/a>, how long has the average expansion lasted since the end of World War II?<\/li>\n<\/ol>\n<\/div>\n<\/section>\n<section id=\"fs-idp54008768\" class=\"review-questions\"><\/section>\n<section id=\"fs-idp1212272\" class=\"critical-thinking\">\n<div class=\"bcc-box bcc-info\">\n<h3>Critical Thinking Questions<\/h3>\n<ol>\n<li id=\"fs-idp5245536\">Why do you suppose that U.S. GDP is so much higher today than 50 or 100 years ago?<\/li>\n<li id=\"fs-idp967696\">Why do you think that GDP does not grow at a steady rate, but rather speeds up and slows down?<\/li>\n<\/ol>\n<\/div>\n<\/section>\n<section id=\"fs-idm81210160\" class=\"references\">\n<h1>References<\/h1>\n<p id=\"fs-idm26865680\">The National Bureau of Economic Research. \u201cInformation on Recessions and Recoveries, the NBER Business Cycle Dating Committee, and related topics.\u201d http:\/\/www.nber.org\/cycles\/main.html.<\/p>\n<\/section>\n<div>\n<h2>Glossary<\/h2>\n<dl id=\"fs-idp4290944\" class=\"definition\">\n<dt>business cycle<\/dt>\n<dd id=\"fs-idp3873088\">the relatively short-term movement of the economy in and out of recession<\/dd>\n<\/dl>\n<dl id=\"fs-idp27754240\" class=\"definition\">\n<dt>depression<\/dt>\n<dd id=\"fs-idp10759360\">an especially lengthy and deep decline in output<\/dd>\n<\/dl>\n<dl id=\"fs-idp26586384\" class=\"definition\">\n<dt>peak<\/dt>\n<dd id=\"fs-idm87433472\">during the business cycle, the highest point of output before a recession begins<\/dd>\n<\/dl>\n<dl id=\"fs-idp3736448\" class=\"definition\">\n<dt>recession<\/dt>\n<dd id=\"fs-idm14196896\">a significant decline in national output<\/dd>\n<\/dl>\n<dl id=\"fs-idp1056848\" class=\"definition\">\n<dt>trough<\/dt>\n<dd id=\"fs-idm42687872\">during the business cycle, the lowest point of output in a recession, before a recovery begins<\/dd>\n<\/dl>\n<\/div>\n<div class=\"bcc-box bcc-info\">\n<h3>Solutions<\/h3>\n<p><strong>Answers to Self-Check Questions<\/strong><\/p>\n<ol>\n<li id=\"fs-idp157584\">Two other major recessions are visible in the figure as slight dips: those of 1973\u20131975, and 1981\u20131982. Two other recessions appear in the figure as a flattening of the path of real GDP. These were in 1990\u20131991 and 2001.<\/li>\n<li id=\"fs-idp523936\">11 recessions in approximately 70 years averages about one recession every six years.<\/li>\n<li id=\"fs-idp7320672\">The table lists the \u201cMonths of Contraction\u201d for each recession. Averaging these figures for the post-WWII recessions gives an average duration of 11 months, or slightly less than a year.<\/li>\n<li id=\"fs-idp16084880\">The table lists the \u201cMonths of Expansion.\u201d Averaging these figures for the post-WWII expansions gives an average expansion of 60.5 months, or more than five years.<\/li>\n<\/ol>\n<\/div>\n","protected":false},"author":32,"menu_order":8,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":["openstax"],"pb_section_license":"cc-by"},"chapter-type":[],"contributor":[63],"license":[52],"class_list":["post-1049","chapter","type-chapter","status-publish","hentry","contributor-openstax","license-cc-by"],"part":102,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/chapters\/1049","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/wp\/v2\/users\/32"}],"version-history":[{"count":6,"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/chapters\/1049\/revisions"}],"predecessor-version":[{"id":1461,"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/chapters\/1049\/revisions\/1461"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/parts\/102"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/chapters\/1049\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/wp\/v2\/media?parent=1049"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/pressbooks\/v2\/chapter-type?post=1049"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/wp\/v2\/contributor?post=1049"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accbertelsen\/wp-json\/wp\/v2\/license?post=1049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}