Markets and Economy

Lessons From Past Recessions

Many business executives wonder when the next recession will begin. Does history hold any clues? Learn what the bubbles of decades past can teach us about the current economic environment.


Many business executives wonder when the next recession will begin. Does history hold any clues? Learn what the bubbles of decades past can teach us about the current economic environment.

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In the past, full employment was nearly always followed by a downturn. Given today’s historically low unemployment rate, many observers wonder when the economy may contract. But the business cycle doesn’t run on a timer.

Although the current expansion is one of the longest lasting in US history, there’s not yet an obvious threat to growth—and every recession in recent history has been caused by a specific trigger:

  • 1990: A collapsing thrift bubble sparked a mild recession. The deregulation of consumer finance had led to a lot of bad debt, and a combination of tightening lending standards and widespread speculative losses pushed the economy into contraction.
  • 2001: A decade later, the dotcom boom appeared to be creating significant wealth. At the cycle’s peak, the stock market’s valuation was double the historical norm. Concerns over Y2K kept the bubble going for a while longer as businesses invested in equipment and programming to keep their systems from crashing when the calendar turned to 2000. After that, the bubble in tech stocks burst—erasing trillions of dollars of equity wealth and sending the economy into a mild recession.
  • 2007-2008: The housing bubble was the worst of all three. A global savings glut allowed an unprecedented volume of capital to flow into the US real estate market. When the bubble collapsed in 2008, the financial crisis affected the entire globe. 

These past bubbles were all unprecedented. The deregulation of thrifts, the rise of the Internet and the boom in global securitization were all new developments, each catching investors off guard. Markets failed to fully price in their risks, setting the stage for sudden downturns when the bubbles began to deflate.

What About Today?

Today, things look different. Growth has been well-balanced and isn’t dependent on any single sector. Alone, low unemployment and mild inflation aren’t destabilizing. For now, there isn’t a major imbalance in the economy that seems likely to spark a new downturn.

View our economic commentary disclaimer.

Jim Glassman, Head Economist, Commercial Banking

Jim Glassman

Jim Glassman, Head Economist, Commercial Banking

Jim Glassman is the Managing Director and Head Economist for Commercial Banking. From regulations and technology to globalization and consumer habits, Jim's insights are used by companies and industries to help them better understand the changing economy and its impact on their businesses.

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