Throughout the 1920s, prices on the U.S. stock exchange rose exponentially, however, by the end of the decade, uncontrolled growth and a stock market propped up by speculation and borrowed money proved unsustainable, resulting in the Wall Street Crash of October 1929. This set a chain of events in motion that led to economic collapse - banks demanded repayment of debts, the property market crashed, and people stopped spending as unemployment rose. Within a year the country was in the midst of an economic depression, and the economy continued on a downward trend until late-1932.

It was during this time where Franklin D. Roosevelt (FDR) was elected president, and he assumed office in March 1933 - through a series of economic reforms and New Deal policies, the economy began to recover. Stock prices fluctuated at more sustainable levels over the next decades, and developments were in line with overall economic development, rather than the uncontrolled growth seen in the 1920s. Overall, it took over 25 years for the Dow Jones value to reach its pre-Crash peak.

Over the course of their first terms in office, no U.S. president in the past 100 years saw as much of a decline in stock prices as Herbert Hoover, and none saw as much of an increase as Franklin D. Roosevelt (FDR) - these were the two presidents in office during the Great Depression. While Hoover is not generally considered to have caused the Wall Street Crash in 1929, less than a year into his term in office, he is viewed as having contributed to its fall, and exacerbating the economic collapse that followed. In contrast, Roosevelt is viewed as overseeing the economic recovery and restoring faith in the stock market played an important role in this.

By the end of Hoover's time in office, stock prices were 82 percent lower than when he entered the White House, whereas prices had risen by 237 percent by the end of Roosevelt's first term. While this is the largest price gain of any president within just one term, it is important to note that stock prices were valued at 317 on the Dow Jones index when Hoover took office, but just 51 when FDR took office four years later - stock prices had peaked in August 1929 at 380 on the Dow Jones index, but the highest they ever reached under FDR was 187, and it was not until late 1954 that they reached pre-Crash levels once more.

Historical dataset of the Dow Jones Industrial Average (DJIA) stock market index for the last 100 years. Historical data is inflation-adjusted using the headline CPI and each data point represents the month-end closing value. The current month is updated on an hourly basis with today's latest value.

Historical dataset for the S&P 500 stock market index since 1927. Historical data is inflation-adjusted using the headline CPI and each data point represents the month-end closing value. The current month is updated on an hourly basis with today's latest value.

In 2024, 62 percent of adults in the United States invested in the stock market. This figure has remained steady over the last few years, and is still below the levels before the Great Recession, when it peaked in 2007 at 65 percent. What is the stock market? The stock market can be defined as a group of stock exchanges, where investors can buy shares in a publicly traded company. In more recent years, it is estimated an increasing number of Americans are using neobrokers, making stock trading more accessible to investors. Other investments A significant number of people think stocks and bonds are the safest investments, while others point to real estate, gold, bonds, or a savings account. Since witnessing the significant one-day losses in the stock market during the Financial Crisis, many investors were turning towards these alternatives in hopes for more stability, particularly for investments with longer maturities. This could explain the decrease in this statistic since 2007. Nevertheless, some speculators enjoy chasing the short-run fluctuations, and others see value in choosing particular stocks.

The Long Depression was, by a large margin, the longest-lasting recession in U.S. history. It began in the U.S. with the Panic of 1873, and lasted for over five years. This depression was the largest in a series of recessions at the turn of the 20th century, which proved to be a period of overall stagnation as the U.S. financial markets failed to keep pace with industrialization and changes in monetary policy. Great Depression The Great Depression, however, is widely considered to have been the most severe recession in U.S. history. Following the Wall Street Crash in 1929, the country's economy collapsed, wages fell and a quarter of the workforce was unemployed. It would take almost four years for recovery to begin. Additionally, U.S. expansion and integration in international markets allowed the depression to become a global event, which became a major catalyst in the build up to the Second World War. Decreasing severity When comparing recessions before and after the Great Depression, they have generally become shorter and less frequent over time. Only three recessions in the latter period have lasted more than one year. Additionally, while there were 12 recessions between 1880 and 1920, there were only six recessions between 1980 and 2020. The most severe recession in recent years was the financial crisis of 2007 (known as the Great Recession), where irresponsible lending policies and lack of government regulation allowed for a property bubble to develop and become detached from the economy over time, this eventually became untenable and the bubble burst. Although the causes of both the Great Depression and Great Recession were similar in many aspects, economists have been able to use historical evidence to try and predict, prevent, or limit the impact of future recessions.

The Dow Jones Industrial Average (DJIA) is a stock market index used to analyze trends in the stock market. While many economists prefer to use other, market-weighted indices (the DJIA is price-weighted) as they are perceived to be more representative of the overall market, the Dow Jones remains one of the most commonly-used indices today, and its longevity allows for historical events and long-term trends to be analyzed over extended periods of time. Average changes in yearly closing prices, for example, shows how markets developed year on year. Figures were more sporadic in early years, but the impact of major events can be observed throughout. For example, the occasions where a decrease of more than 25 percent was observed each coincided with a major recession; these include the Post-WWI Recession in 1920, the Great Depression in 1929, the Recession of 1937-38, the 1973-75 Recession, and the Great Recession in 2008.

Lehman Brothers, the fourth largest investment bank on Wall Street, declared bankruptcy on the 15th of September 2008, becoming the largest bankruptcy in U.S. history. The investment house, which was founded in the mid-19th century, had become heavily involved in the U.S. housing bubble in the early 2000s, with its large holdings of toxic mortgage-backed securities (MBS) ultimately causing the bank's downfall. The bank had expanded rapidly following the repeal of the Glass-Steagall Act in 1999, which meant that investment banks could also engage in commercial banking activities. Lehman vertically integrated their mortgage business, buying smaller commercial enterprises that originated housing loans, which allowed the bank to expand its MBS holdings. The downfall of Lehman and the crash of '08 As the U.S. housing market began to slow down in 2006, the default rate on housing loans began to spike, triggering losses for Lehman from their MBS portfolio. Lehman's main competitor in mortgage financing, Bear Stearns, was bought by J.P. Morgan Chase in order to prevent bankruptcy in March 2008, leading investors and lenders to become increasingly concerned about the bank's financial health. As the bank relied on short-term funding on money markets in order to meet its obligations, the news of its huge losses in the third-quarter of 2008 further prevented it from funding itself on financial markets. By September, it was clear that without external assistance, the bank would fail. As its losses from credit default swaps mounted due to the deepening crash in the housing market, Lehman was forced to declare bankruptcy on September 15, as no buyer could be found to save the bank. The collapse of Lehman triggered panic in global financial markets, forcing the U.S. government to step in and bail-out the insurance giant AIG the next day on September 16. The effects of this financial crisis hit the non-financial economy hard, causing a global recession in 2009.

On October 29, 1929, the U.S. experienced the most devastating stock market crash in it's history. The Wall Street Crash of 1929 set in motion the Great Depression, which lasted for twelve years and affected virtually all industrialized countries. In the United States, GDP fell to it's lowest recorded level of just 57 billion U.S dollars in 1933, before rising again shortly before the Second World War. After the war, GDP fluctuated, but it increased gradually until the Great Recession in 2008. Real GDP Real GDP allows us to compare GDP over time, by adjusting all figures for inflation. In this case, all numbers have been adjusted to the value of the US dollar in FY2012. While GDP rose every year between 1946 and 2008, when this is adjusted for inflation it can see that the real GDP dropped at least once in every decade except the 1960s and 2010s. The Great Recession Apart from the Great Depression, and immediately after WWII, there have been two times where both GDP and real GDP dropped together. The first was during the Great Recession, which lasted from December 2007 until June 2009 in the US, although its impact was felt for years after this. After the collapse of the financial sector in the US, the government famously bailed out some of the country's largest banking and lending institutions. Since recovery began in late 2009, US GDP has grown year-on-year, and reached 21.4 trillion dollars in 2019. The coronavirus pandemic and the associated lockdowns then saw GDP fall again, for the first time in a decade. As economic recovery from the pandemic has been compounded by supply chain issues, inflation, and rising global geopolitical instability, it remains to be seen what the future holds for the U.S. economy.

United States - GDP-Based Recession Indicator Index was 6.80000 Percentage Points in October of 2024, according to the United States Federal Reserve. Historically, United States - GDP-Based Recession Indicator Index reached a record high of 100.00000 in April of 2020 and a record low of 0.00000 in July of 2020. Trading Economics provides the current actual value, an historical data chart and related indicators for United States - GDP-Based Recession Indicator Index - last updated from the United States Federal Reserve on June of 2025.

Graph and download economic data for Real-time Sahm Rule Recession Indicator (SAHMREALTIME) from Dec 1959 to May 2025 about recession indicators, academic data, and USA.

The 2020 recession did not follow the trend of previous recessions in the United States because only six months elapsed between the yield curve inversion and the 2020 recession. Over the last five decades, 12 months, on average, has elapsed between the initial yield curve inversion and the beginning of a recession in the United States. For instance, the yield curve inverted initially in January 2006, which was 22 months before the start of the 2008 recession. A yield curve inversion refers to the event where short-term Treasury bonds, such as one or three month bonds, have higher yields than longer term bonds, such as three or five year bonds. This is unusual, because long-term investments typically have higher yields than short-term ones in order to reward investors for taking on the extra risk of longer term investments. Monthly updates on the Treasury yield curve can be seen here.

By November 2025, it is projected that there is a probability of 33.56 percent that the United States will fall into another economic recession. This reflects a significant decrease from the projection of the preceding month.

The U.S. federal funds rate peaked in 2023 at its highest level since the 2007-08 financial crisis, reaching 5.33 percent by December 2023. A significant shift in monetary policy occurred in the second half of 2024, with the Federal Reserve implementing regular rate cuts. By December 2024, the rate had declined to 4.48 percent. What is a central bank rate? The federal funds rate determines the cost of overnight borrowing between banks, allowing them to maintain necessary cash reserves and ensure financial system liquidity. When this rate rises, banks become more inclined to hold rather than lend money, reducing the money supply. While this decreased lending slows economic activity, it helps control inflation by limiting the circulation of money in the economy. Historic perspective The federal funds rate historically follows cyclical patterns, falling during recessions and gradually rising during economic recoveries. Some central banks, notably the European Central Bank, went beyond traditional monetary policy by implementing both aggressive asset purchases and negative interest rates.

As of April 16, 2025, the yield for a ten-year U.S. government bond was 4.34 percent, while the yield for a two-year bond was 3.86 percent. This represents an inverted yield curve, whereby bonds of longer maturities provide a lower yield, reflecting investors' expectations for a decline in long-term interest rates. Hence, making long-term debt holders open to more risk under the uncertainty around the condition of financial markets in the future. That markets are uncertain can be seen by considering both the short-term fluctuations, and the long-term downward trend, of the yields of U.S. government bonds from 2006 to 2021, before the treasury yield curve increased again significantly in the following years. What are government bonds? Government bonds, otherwise called ‘sovereign’ or ‘treasury’ bonds, are financial instruments used by governments to raise money for government spending. Investors give the government a certain amount of money (the ‘face value’), to be repaid at a specified time in the future (the ‘maturity date’). In addition, the government makes regular periodic interest payments (called ‘coupon payments’). Once initially issued, government bonds are tradable on financial markets, meaning their value can fluctuate over time (even though the underlying face value and coupon payments remain the same). Investors are attracted to government bonds as, provided the country in question has a stable economy and political system, they are a very safe investment. Accordingly, in periods of economic turmoil, investors may be willing to accept a negative overall return in order to have a safe haven for their money. For example, once the market value is compared to the total received from remaining interest payments and the face value, investors have been willing to accept a negative return on two-year German government bonds between 2014 and 2021. Conversely, if the underlying economy and political structures are weak, investors demand a higher return to compensate for the higher risk they take on. Consequently, the return on bonds in emerging markets like Brazil are consistently higher than that of the United States (and other developed economies). Inverted yield curves When investors are worried about the financial future, it can lead to what is called an ‘inverted yield curve’. An inverted yield curve is where investors pay more for short term bonds than long term, indicating they do not have confidence in long-term financial conditions. Historically, the yield curve has historically inverted before each of the last five U.S. recessions. The last U.S. yield curve inversion occurred at several brief points in 2019 – a trend which continued until the Federal Reserve cut interest rates several times over that year. However, the ultimate trigger for the next recession was the unpredicted, exogenous shock of the global coronavirus (COVID-19) pandemic, showing how such informal indicators may be grounded just as much in coincidence as causation.