Year of recession - 1986: Every recession is different, but none are pleasant

ONE definition of a growth recession is two consecutive quarters of negative economic activity.

Based on the economic evidence in 2008 it would appear growth has more than likely contracted in the first half of 2008. The ESRI contention that we will experience our first recession since 1986 looks very believable. In the first four months of the year the volume of retail sales was 0.8% lower than the same period in 2007, unemployment increased by 47,746 in the year to May, tax revenues are falling sharply, and the housing market is still falling precipitously. This is the key contributor to the contraction in growth, but it is being accentuated by the global credit crisis.

It is important to keep this forecast in perspective however. If GNP does decline modestly in 2008 as the ESRI is suggesting, it would follow 15 years of uninterrupted and strong economic expansion. Back in 1986, the contraction in economic activity followed a period of economic stagnation and did not follow a period of boom. This would mark a recession in 2008 as quite different than in 1986.