I had pointedto two research notes from St Louis Fed and Minneapolis Fed comparing this recession with previous recessions in US. In another post I had asked it would be interesting to compare and analyse the crisis in other economies as well.
Andrew Sentance of Bank of England in a speech helps understand and compare current recession in UK with previous recessions in UK. He only includes post war recessions and so we don’t have great depression stats in UK.
He has a nice table (on page 7 )
|Growth peak||Period of Falling GDP||Drop in output during recession||pre-recession GDP level recovered|
He says BoE has forecasted4% drop in GDP which is not as bad as early 1980s recession. THis is in line with what research has shown in US as well- the current recession is yet to see negative figures seen in previous recessions.
He also points what is surprising (though common) is that economy has moved from highs to lows in a very quick fashion:
Another similarity between our current experience and the more distant recessions in the mid-1970s and the early-1980s is the speed with which the economy has moved from reasonably healthy growth into recession. Many people have commented that in the current cycle, the economy has moved in less than a year from reasonably healthy growth in late 2007 and early 2008 to outright recession. But that was also very much the pattern we saw in 1973/4 and 1979/80, as Chart 4 shows.
In early 1973, GDP growth peaked at a staggering year-on-year growth rate of 10% – with the Barber boom was in full swing. And yet by the year-end, the UK economy was in recession as the first oil price shock took its toll, a wave of industrial unrest swept the country and workplaces were on a three-day week. Similarly, in 1979/80 it took the economy just a year to move from healthy growth in the first half of 1979 to full-blown recession in early 1980.
He also says that in previous recession there was high inflation (this was actually a case with most previous recessions as well). This was the case with this recession as well but inflation has declined sharply since then.
Nice insight into UK recession history.