1990-91 recession: causes and indicators
1990-91 recession: from July 16, 1990 to March 29, 1991.
Updated
What happened?
The savings and loan crisis, the invasion of Kuwait and the oil price spike led the US into a short recession between July 1990 and March 1991. For this analysis, the episode runs from July 16, 1990 to March 29, 1991.
What would Crisis Monitor have shown?
Recalculating the index each week with the data available at the time, it stood at 16 out of 100 when the decline began and peaked at 64 in Jan 1991. The index moved to Alert (35 or more) in Oct 1990 (3 months after) and entered Crisis (60 or more) in Dec 1990 (5 months after).
This is a reconstruction made after the fact using weekly data: it helps show how the indicators behave, but it does not guarantee that things will happen the same way again.
How did the data move in that crisis?
From one year before to the end of the crisis. The vertical line marks when it began; the dashed red line is the level beyond which the data point becomes a concern.
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Which data points warned first?
3 data points entered the stress zone before the crisis began: ease of borrowing, unemployment benefit claims, long vs short rates (2 years).
Gold and copper are not part of the index, but they help show fear and activity: see how they moved on the gold and copper pages.
The first time each data point entered the stress zone (score 66 out of 100), searching from 12 months before the start. “Before” = it warned before the crisis began; “after” = it reacted late. Note: after another crisis, some data points were still elevated from the previous one.
| Indicator | How does it usually behave? | When did it first become a concern? | When did it warn? | Moment of peak stress |
|---|---|---|---|---|
| Ease of borrowing | Usually warns early | Jan 1990 | 6 months before | 0.52 Jan 1991 |
| Unemployment benefit claims | Usually warns early | Jan 1990 | 6 months before | 45.0% Mar 1991 |
| Long vs short rates (2 years) | Usually warns early | Mar 1990 | 4 months before | -0.09% Mar 1990 |
| Stock market fear (VIX) | Moves with the crisis | Aug 1990 | 1 month after | 36.47 Aug 1990 |
| Consumer sentiment | Usually warns early | Oct 1990 | 3 months after | -30.0 pts Nov 1990 |
| Recession probability | Moves with the crisis | Nov 1990 | 4 months after | 61.5% Jan 1991 |
| Rise in unemployment (Sahm rule) | Moves with the crisis | Dec 1990 | 5 months after | 0.97 Mar 1991 |
| Factory output | Moves with the crisis | Mar 1991 | 8 months after | -2.6% Mar 1991 |
| Long vs short rates (3 months) | Usually warns early | Never became a concern | — | 0.14% Jan 1990 |
| Credit of ordinary companies | Usually warns early | Never became a concern | — | 2.43% Jan 1991 |
| Dollar strength | Moves with the crisis | Never became a concern | — | 92.05 Jan 1990 |
| Credit of risky companies | Usually warns early | FRED only publishes the last 3 years of this series (ICE license) | ||
| Financial stress (St. Louis) | Moves with the crisis | Did not exist or there was no data in this period | ||
| Store sales | Moves with the crisis | Did not exist or there was no data in this period | ||
| Copper vs gold | Usually warns early | Did not exist or there was no data in this period | ||
Does the current moment resemble that crisis?
Score from 0 to 100 for each area, today and at different moments of that crisis.
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How does everything look now? See the live dashboard.