Cyclical fluctuations and crises in the US economy, 1929–2008 – Additional details to the crisis anatomy

Abstract

Is there a universal attitude to or description of economic crises and capital- and money market processes (as well as, certainly, of the ways out of the crises) that could be used in such a gross situation, first in the interpretation of the situation and then in looking for the right solutions? Well, the answer is rather distressing: such reliable or at least tested, widely used and of course sufficiently general descriptions – let us point out in the beginning – are not available. Lacking a blissful theory, we have historical retrospection to provide several positively good analogies, however. It is some of these latter that are offered by this study, which attempts to place the performance, cyclicality and share markets of the US economy in a long enough historical perspective. Examining almost 70 years of the history of the US economy we have found that the struggles out of the crises and the revivals of growth have become increasingly efficient from an economic historical point of view, taking increasingly shorter time periods. The ability of learning from the stock exchange crises has been also improving and institutional adaptation, too, has been apparent. In previous difficult periods also, the return of optimism has taken increasingly shorter time and this historically improved learning ability characteristic of the US markets can by all means give hope amidst the current crisis as well. Considering the above, the study argues that, in 2009, there is a good chance for the return of the American economy – and, together with it, of the capital and money markets – to the normal course as fast as within 3–4 quarters