Economy

12 Pages 3070 Words

ansfer payments. There are several other indicators however these best pertain to the comparison we need to make between the recessions. Both of the recessions will be discussed and then in the conclusion I will compare how the recessions match up to one another. The 1990-91 recession will be discussed first and our current recession will follow.
Economy in General
Every recession has factors that influence them immensely, usually in ways that magnify their strength. Example of such factors can include major wars, price fluctuations of major goods, currency rate fluctuations, etc. The 1990-91 recession was influenced greatly by a few noteworthy factors. Unusual events such as the “credit crunch” and the Persian Gulf War brought on high pressures and lots of extra uncertainty. Along with the external factors this recession was a post-war recession. It is worthy to note that though it was a post war recession it posted numbers much milder than the past recessions occurring after World War II.
Duration and Diffusion
Some economists use three variables duration, diffusion, and depth to measure the strength of a recession. Duration simply measures how long a recession lasts. The average length of recessions thus far is eleven months. The 1990-91 recession lasted only nine months, resulting in a below average posting. Diffusion is based by examining the industries with declining employment. The maximum percentage for most post-war recessions was around 81 percent where as this only posted a 73 percent. Figure 1.1 and 1.2 show data and patterns of previous recessions dealing with duration and diffusion.
Figure 1.1


Source: Board of Governors of the Federal Reserve System; Moore (1983) National Bureau of Economic Analysis; U.S. Bureau of Labor Statistics.
Figure 1.2

Source: Board of Governors of the Federal Reserve System; Moore (1983) National Bureau of Economic Analysis; U.S. Bureau of Labor Statistics.
Empl...