Everyone is interested in a glimpse into the future, wondering when the next recession will hit, but when it comes to recessions, you can learn a lot by looking at the past. Recessions have broad, sweeping effects on the economic/consumer climate. It’s important to note that recessions are part of the economic cycle: They are necessary as part of a cycle of expansion and contraction. .
A V-shaped recession obviously looks like a letter V and is recursive. GDP goes down and recovers at the same relative slope. The recession of 1990-91 was V-shaped. V-shaped recessions are like tossing a ball. If the ball bounces back up at a similar angle, there is symmetry. This is the type of recession we most commonly see.
A U-shaped recession happens when the economy goes down and stays down. The best example of this was the 1973-75 recession when inflation was running hot and oil prices spiked. I remember the gas lines. People with even number license plates able to buy gas on one day and odd numbered plates on another. I once ran out of gas in the gas line.
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