The expansion that followed the recession of 1981 – 1982-s, lasted nearly eight years, until July 1990 when the economy experienced recession again. This reduction was relatively short and insignificant (the unemployment rate reached the highest value of 7.7% in mid-1992 -that is not particularly high for a phase of recession). Moreover, after a slight reduction of 1990 – 1991-s. Recession gave way to the next major expansion. Indeed, in February 2000, after 107 months without a recession, the expansion of the 1990-s became the longest in American history, surpassing the duration of the expansion period of the Vietnam War in the 1960-s. Considering the expansion of the 1980s and 1990s in total, we can see that the U.S. economy in a period of more than ten years, only once experienced relatively mild recession. Some researchers call this long period of prosperity as a long boom. The long boom ended in a peak of the business cycle in march 2001, thereon the U.S. economy entered a period of eight months recession and growth slowdown. However, the economy weakened considerably during the second half of 2000-s as well as spring and summer of 2001. The situation was complicated by the terrorist attacks of 11 September 2001, which caused a significant loss of jobs in New York.
Industrial production (fig. 3.4), steel producers and trade sales declined significantly since July, 2000. dot-com bubble, which began in March 2000, (market value of many high-technology companies shares declined during the year on 2/3 or even more.)Employment and real personal income began to fall in 2001 (Figure 8.3), and while the recession has not become unusually strong by historical standards, by the end of 2001, it became clear that economic activity dropped dramatically. For example, between march and November 2001, total employment in non-agricultural sector dropped by 1.6 million employees, which, in percentage terms, only slightly less that in previous six recessions
fig. 3.4 Total unemployment in non agricultural sector
FRED Graph Observations Federal Reserve Economic Data Economic Research Division Federal Reserve Bank of St. Louis
Now let us consider the cyclical behavior of some key macro-economic variables. Dynamics some of their changes I showed on Figure 3.5-3.8 These graphics. cover a long period of time and based on annual data. But we can get a better understanding of the cycle in short periods, considering quarterly or monthly data.