Our economy is determined a lot by how we perceive it's growth or lack of it...
Hi Moondancing,
I don't think that's ever been the case, except in two circumstances.
The recession during the Bush Administration was caused by Capital reallocation, namely from the defense sector to other sectors of the economy. It would have lasted only a quarter, but the Media hyped it as Doom & Gloom and it lasted 8 months.
You have to understand the INF Treaty goes into effect, so Martin-Marietta and Boeing take a hit. Then the German Air Force gives up its Pershing IAs so Martin-Marietta takes another hit. Then Bush unilaterally withdrew the Lance missile system, so LMV and Martin-Marietta take a hit, especially since Bush cancelled the contract for the Pershing IIB follow-on to the Lance.
Then the Army is cut from 770,000 to 385,000 and the Air Force and Navy have plane and ship contracts cancelled and many other military contracts were cancelled.
That rolls downhill to suppliers of parts and supplies who have to lay off workers because the contracts were cancelled.
The Media made it out to be the next Great Depression and that just made things worse.
The 1952-53 Recession was the other.
When the Korean War starts in June 1950, it hasn't even been 4 years since rationing ended, so businesses and households are in a panic thinking the government is going to start rationing again.
Households are buying and hoarding sugar, flour, coffee and a bunch of other things and businesses are hoarding all metals, coal, rubber and other things because they think rationing is eminent.
Because of that, you have rampant Demand-pull Inflation running in excess of 10%.
Then the Federal Reserve stupidly thinks it can control Demand-pull Inflation by raising interest rates and all that did was throttle the economy and a recession started.
If Truman had come out and said there wasn't going to be any rationing, then the 1952-53 Recession would never have happened, but Truman wasn't the sharpest tool in the shed.
The last recession was also caused by Capital reallocation, except Capital wasn't being reallocated within the US, you had Capital Flight where Capital is being relocated outside the US, mainly in southeast Asia.
People are losing their jobs but finding other jobs, except those jobs didn't pay as much as their last job. Then job losses start piling up and then people can't pay their mortgages because they don't have jobs or their jobs don't pay enough to cover it and it goes downhill from there.