Reading John Quiggin’s most recent book blogging post, I was reminded of how atypical my age cohort’s experience is. Counting the current (possibly ended) recession, we’ve lived through three recessions, two of which were quite mild. Depending on our exact age, we were only paying attention for only one of those. I knew about a ‘recession’ in 1990-1991, but I was six and what did I understand? But before our generation:
Whatever the defintion, in the years before 1981 (the end of the Volcker recession) recessions in the US were relatively frequent, with the intervening expansions averaging a little over four years. The NBER Committee defined nine recessions between 1945 and 1981, two of which (those of the early 1970s and the double-dip recession of 1980-81, were both long and severe).
I was quite struck by this difference, which has to have a huge effect on how people our age perceive the financial crisis and uncertainty about the future. You can imagine the effect going either way. Perhaps we assume there has to be a return to “normality” and sustained growth, or you can imagine the sheer idea of a recession being so unfamiliar and paralyzing that we turn towards an apocalyptic mindset.
Of course if Quiggin is right in thinking that The Great Moderation was a mirage, the next quarter of our lives will nothing like what we’ve experienced so far.