JULY 1953 – MAY 1954 (10 months)
The Early 50s recession, also known as the Recession of 1953, was mainly brought about because of the post Korean War financial bungles that often accompany the end of any war. False highs, this time in the form of a large inflationary period, came crashing down as the war came to a close and more funds were put into national security than were ever before.
Another factor in the Early 50s recession was that in 1952, the Federal Reserve changed its policy. They reformed the monetary policy to be more restrictive, and in doing so, hoped that it would control inflation.
Thus, with further straining of the post-war economic environment, a small collapse was in order. The modern economic cycle will need to relieve pressure once in a while, and the system relieves the pressure with these “recessions” as we call them. They happen every so often, and part of the Fed’s responsibility is to try to make it as smooth as possible.