Recession of 1953: Difference between revisions
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{{Short description|Economic downturn in the United States}} |
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[[File:1953 recession in US.jpg|GDP growth |
[[File:1953 recession in US.jpg|GDP growth in the U.S., 1951–1955{{Legend|#4682B4|Percent change from preceding period in [[real GDP]] (annualized; seasonally adjusted)|border=1px solid #aaa}} |
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{{Legend2|#800000|Average GDP growth (1947–2009)|border=1px solid #aaa}} |
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==Preceding the recession== |
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⚫ | The recession |
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==Causes== |
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[[File:US 1950s unemployment rate.png|thumb|U.S. unemployment rate, 1948–1959|331x331px]] |
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⚫ | The expected inflation never happened, but the policy was still implemented. During this time, the Treasury also lengthened the maturity of the national debt and pursued flexible interest rate policies. Alongside these policies, the Treasury also began to do debt |
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⚫ | The '''recession of 1953''' was a period of economic downturn in the [[United States]] that 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 speechwriter for President [[Harry S. Truman]], as "relatively mild and brief."<ref>James L. Sundquist, ''Politics and Policy: The Eisenhower, Kennedy, and Johnson Years'', 1969, pg. 431, IBAN 0815782225</ref> The 1953 recession is an example of a [[V-shaped recession]], with a sharp three quarter decline that is followed by a sharp recovery. |
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== Causes == |
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⚫ | The recession occurred because of a combination of events during the earliest parts of the 1950s. In 1951, there was a post-[[Korean War]] inflationary period and later in the year more funds were transferred into [[national security]]. Further [[inflation]] was expected into 1952 and the Federal Reserve set in motion restrictive [[monetary policy]]. |
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The recession of 1953 was demand-driven because the dramatic changes of interest rates earlier in the year led to an increase in pessimism towards the economy which led to a decrease in aggregate demand. Before the Federal Reserve stepped in to increase availability of reserves, the increase in interest rates continued to decrease [[aggregate demand]]. And finally, the actions of the Federal Reserve led to an increase in consumer expectation of an inevitable recession which led to an even further drop in aggregate demand and an increase in savings. Thus, the recession of 1953 began on the demand side. The sharp three quarter decline with a clear trough, followed by a sharp recovery means that the 1953 recession is an exampled of a [[V-shaped recession]]. |
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⚫ | The expected inflation never happened, but the policy was still implemented. During this time, the Treasury also lengthened the maturity of the national debt and pursued flexible interest rate policies. Alongside these policies, the Treasury also began to do [[debt refunding]], which only increased interest rates further and subsequently issued a low percentage bond. The Federal Reserve recognized the increasing interest rates and decided to allow more reserves to be available. This worked, but interest rates plummeted sending the U.S. into a [[demand]]-driven recession of output and employment. GDP declined because of government spending and investment. |
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==See also== |
==See also== |
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*{{cite journal|title = Monetary Policy and the Recession of 1953-54|last = Maloney|first = H. D.|journal = [[The Journal of Finance]]|issn = 1540-6261|volume = 14|issue = 4|year = 1959|pages = 569–70|doi = 10.2307/2976370|jstor = 2976370|via = [[JSTOR]]}} |
*{{cite journal|title = Monetary Policy and the Recession of 1953-54|last = Maloney|first = H. D.|journal = [[The Journal of Finance]]|issn = 1540-6261|volume = 14|issue = 4|year = 1959|pages = 569–70|doi = 10.2307/2976370|jstor = 2976370|via = [[JSTOR]]}} |
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{{United States–Commonwealth of Nations recessions}} |
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{{Federal Reserve System}} |
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[[Category:Recessions in the United States]] |
[[Category:Recessions in the United States]] |
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[[Category:1953 in the United States]] |
[[Category:1953 in the United States]] |
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[[Category:1954 in the United States]] |
[[Category:1954 in the United States]] |
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[[Category:1953 in |
[[Category:1953 in economic history]] |
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[[Category:1954 in economic history]] |
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[[Category:Presidency of Harry S. Truman]] |
[[Category:Presidency of Harry S. Truman]] |
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[[Category:Presidency of Dwight D. Eisenhower]] |
[[Category:Presidency of Dwight D. Eisenhower]] |
Latest revision as of 16:51, 4 February 2024
This article needs additional citations for verification. (January 2016) |
The recession of 1953 was a period of economic downturn in the United States that 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 speechwriter for President Harry S. Truman, as "relatively mild and brief."[1] The 1953 recession is an example of a V-shaped recession, with a sharp three quarter decline that is followed by a sharp recovery.
Causes
[edit]The recession occurred because of a combination of events during the earliest parts of the 1950s. In 1951, there was a post-Korean War inflationary period and later in the year more funds were transferred into national security. Further inflation was expected into 1952 and the Federal Reserve set in motion restrictive monetary policy.
The expected inflation never happened, but the policy was still implemented. During this time, the Treasury also lengthened the maturity of the national debt and pursued flexible interest rate policies. Alongside these policies, the Treasury also began to do debt refunding, which only increased interest rates further and subsequently issued a low percentage bond. The Federal Reserve recognized the increasing interest rates and decided to allow more reserves to be available. This worked, but interest rates plummeted sending the U.S. into a demand-driven recession of output and employment. GDP declined because of government spending and investment.
See also
[edit]References
[edit]- ^ James L. Sundquist, Politics and Policy: The Eisenhower, Kennedy, and Johnson Years, 1969, pg. 431, IBAN 0815782225
Further reading
[edit]- Friedman, Milton; Schwartz, Anna J. (1993) [1963]. A Monetary History of the United States, 1867–1960. Chicago: University of Chicago Press. pp. 612–614. ISBN 978-0691003542.
- Meltzer, Allan H. (2009). A History of the Federal Reserve – Volume 2, Book 1: 1951–1969. Chicago: University of Chicago Press. pp. 106–115. ISBN 978-0226520025.
- Bremner, Robert P. (2004). Chairman of the Fed: William McChesney Martin Jr. and the Creation of the American Financial System. New Haven, CT: Yale University Press. pp. 106–110. ISBN 978-0300105087.
External links
[edit]- Bureau of Economic Analysis
- Business Cycle Expansions and Contractions
- Maloney, H. D. (1959). "Monetary Policy and the Recession of 1953-54". The Journal of Finance. 14 (4): 569–70. doi:10.2307/2976370. ISSN 1540-6261. JSTOR 2976370 – via JSTOR.