Long Depression
In the United States, the Long Depression began with the Panic of 1873. The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction. Figures from Milton Friedman and Anna Schwartz show net national product increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame. However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent, per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.
History of the United States (1964–1980)
Inflationary pressures led to key shifts in economic policies. Following the Great Depression of the 1930s, recessions—periods of slow economic growth and high unemployment—were viewed as the greatest of economic threats, which could be counteracted by heavy government spending or cutting taxes so that consumers would spend more. In the 1970s, major price increases, particularly for energy, created a strong fear of inflation; as a result, government leaders concentrated more on controlling inflation than on combating recession by limiting spending, resisting tax cuts, and reining in growth in the money supply. The erratic economic programs of the Nixon administration were indicative of a broader national confusion about the prospects for future American prosperity. Nixon and his advisers had a poor understanding of the complexities of the global economy (Henry Kissinger once confessed that economics were mostly a blank spot to him) and all of them belonged to the generation that came of age during the New Deal era and believed strongly in government intervention in the economy. They preferred quick, dirty, short-term fixes to complex economy issues. These underlying problems set the stage for conservative reaction, a more aggressive foreign policy, and a retreat from welfare-based solutions for minorities and the poor that would characterize the subsequent decades.