Shrinking Like It’s 1958

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How bad have the last two quarters been?

Over the last six months, the economy shrank at its fastest rate since late 1957 and early 1958. That’s the only decline, in fact, that was worse than the current one, since the government began keeping quarterly records just after World War II.

Here are the worst six-month declines in economic activity since 1947:

3rd quarter, 1957 - 1st quarter, 1958: -3.7 percent
3rd quarter, 2008 - 1st quarter, 2009: -3.2 percent
3rd quarter, 1981 - 1st quarter, 1982: -2.9 percent
1st quarter, 1980 - 3rd quarter, 1980: -2.2 percent
2nd quarter, 1953 - 4th quarter, 1953: -2.2 percent

Data: Bureau of Economic Analysis, via Haver
A technical note: These numbers aren’t as scary as the ones being reported in the headlines today, because the official numbers describe the annualized rate of decline. The economy didn’t actually shrink 6.1 percent in the fourth quarter, despite what the government reported. It shrank at a rate that, were it to continue for a full year, would cause the economy to be 6.1 percent smaller at the end of that year.

The recession of 1957-58, like the current one, was a deep one and affected much of the world. But by 1958, the United States economy was growing rapidly. Not many economists expect that we’ll be able to say the same anytime this year.

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