Recession of 1953
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In the United States the Recession of 1953 began in the second quarter of 1953 and lasted until the first quarter of 1954. The total recession cost roughly $56 billion.
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[edit] Preceding the Recession
The recession from 1953 to 1954 occurred because of a combination of events during the earliest parts of the 1950s. In 1951, there was a post-Korean War inflationary period and later in the year more funds were transferred into national security. Further inflation was expected into 1952 and the Federal Reserve set in motion restrictive fiscal policy.
[edit] Type of recession
The recession of 1953 was demand-driven because the dramatic changes of interest rates earlier in the year led to an increase in pessimism towards the economy which led to a decrease in aggregate demand. Before the Federal Reserve stepped in to increase availability of reserves, the increase in interest rates continued to decrease aggregate demand. And finally, the actions of the Federal Reserve led to an increase in consumer expectation of an inevitable recession which led to an even further drop in aggregate demand and an increase in savings. Thus, the recession of 1953 began on the demand side.
