US history has been filled with the boom and bust cycles of capitalism, also known as the business cycle — expansions and contractions that occur repeatedly. In short, economic trauma and dislocation have occurred every 20 to 30 years. While the American economic experience has not generally been as horrific for most people as in less stable economies, with fewer resources, these periods can be devastating. Whether we like it or not, we are economic animals, blown high and low by economic forces beyond our control.
The point of sharing this economic history is that in your lifetime, you will almost certainly face economic hard times. Almost no generation has escaped them. Your parents’ and grandparents’ economic experience will likely affect your life and your psychology. That means, establish a pattern of saving. Save for a rainy day. Save for hard times because they will come.
Crippling depression after the French and Indian War, 1760s. The Brits were supposed to pay off the debt but did not.
Economic depression after the Revolutionary War, 1782-89. No standard currency in the new nation. The country had huge debts from the war, and money became worthless. “Not worth a Continental” was a common phrase.
Depression of 1807. About 10 percent of New York freemen arrested for debt.
Panic of 1819. Wages fell from 75 cents to 12 cents.
Panic of 1837, sparked by deregulation of banking, followed by depression in “the crippling forties” or the “hungry 40s.” Nine out of 10 factories closed. President Martin Van Ruin blamed, but it wasn’t his fault — more the fault of his predecessor Andrew Jackson. Stock market crashed. Recession lasted seven long years. To ameliorate the situation, an end was put to debtors prisons, and bankruptcy laws were enacted. Americans became risk takers in ways that Europeans were not because they could write off most of their debts.
Civil War, 1861-1665. Economic devastation of areas where battles took place.
Panic of 1873, leading to depression and a populist revolt.
Panic of 1893, followed by bankruptcy of Philadelphia and Reading Railroad and depression. Workers who unionized could easily be replaced by flood of immigrants.
Great Depression from 1929 to 1936. One out of four Americans are unemployed. Through the Social Security Act of 1935, the US federal government encouraged individual states to adopt unemployment insurance plans, and send weekly benefits to workers who were jobless through no fault of their own.
Age of Affluence. Wide and deep economic growth and prosperity from 1941 to 1971 — 30 years.
1962-65: John F. Kennedy signed the largest tax cut in American history. He hoped it would relieve unemployment. Instead it undermined his reform programs. His successor Lyndon Johnson pushed through Medicare, a health insurance program for the elderly, and Medicaid, a health insurance program for the poor.
Stagflation of the 1970s and early 1980s: high inflation and high unemployment. Just as women entered the work force in droves, two paychecks became necessary for a middle-class family to survive in most parts of the US.
Great Recession of 2008-2012; wage stagnation into 2018. Unemployment rose by five percent. Home values declined by 20 percent. Millions of Americans lost their homes 2008-12. Not until 2017 or 2018 did the vast majority of Americans regain the net worth they had in 2007.
Pandemic of 2020: Most if not all of the economic gains since 2008 were wiped out in the course of about one month, March 2020. Middle and working class Americans may feel that they cannot get a permanent break.