The official dating of recessions is done by
One of the table’s benefits is that it gives a visual presentation of which recessions were accompanied by bank panics and which were not.Equally important, it distinguishes between bank panics and periods of significant numbers of bank failures.The one case where I diverge from some (but not all) mainstream historical accounts is the alleged recession during the banking crisis that began in 1839, after the recovery from the 1837 recession. North (1961), and Peter Temin (1969) have all noted, estimates of real GDP growth over the next four years are quite robust.Thus, 1839-1843 appears to be another case were deflation (in this case, quite severe) is confused with depression. But Elmus Wicker (2000) has persuasively demonstrated that the alleged Panics of 18 were really only incipient financial crises nipped in the bud by the actions of bank clearinghouses.So it is crucial to distinguish between periods of panics and failures, although specifying the latter requires judgment calls. To be sure, banking in the United States has never been fully deregulated.For the monthly number of national bank failures prior to the Fed’s creation, I have depended heavily on Comptroller of the Currency (1915), v. Even from 1846 until 1861, under the Independent Treasury during the alleged free-banking period, when there was almost no significant national regulation of the financial system, state governments still imposed extensive, counter-productive banking regulation.Even if all suspensions had resulted in failures, which of course did not happen, we still have a failure rate of 0.7 percent for all commercial banks. Wheelock (1998), charts meant to show bank failures are instead clearly depicting statistics on the annual number of bank suspensions.Confusion of bank suspensions with bank failures can even infect serious scholarly work. Similarly, periods of numerous bank failures do not always coincide with bank panics, as the S&L crisis dramatically illustrates.
For instance, Calomiris and Gorton report the failure of only six banks out of a total of 6412 during the Panic of 1907, or less than 0.1 percent.
This is one of the most striking cases in which some observers at the time and many economists today have confused mild secular deflation with a depression – a confusion exposed by George Selgin in (1997). GDP prior to the Civil War are even more problematic, making precise monthly dating of recessions impossible.
Even the Kuznets-Kendrick estimates show no decline in real net national product during this recession, and an acceleration of its growth after 1875. Davis’s (2006) revised dating, shortening this recession to not more than 27 months, and probably less if he had attempted a monthly rather than just an annual revision of the depression’s end point. So I have relied upon the consensus of standard historical accounts along with the GDP statistics in (Carter 2006) to determine what qualifies as an actual recession and its annual dating.
I have tried to integrate the best of the approaches of both economists and historians, using them to cross check each other.
My chronology therefore differs in important ways from prior lists.