January 1, 1960. The defending champion Boston Celtics were clearly playoff-bound. That night, though, they struggled against the last-place Cincinnati Royals and went into halftime tied at 60 points each. The Royals went on to win comfortably, 128-115, and the Celtics failed in their attempt to win an all-time league-record 18 straight games.
“Cincinnati, which previously had lost 13 straight games to the Celtics and had won only 10 games in all [the 1959-60 season] prior to tonight, jumped ahead for keeps in the third period, and finished strong in turning the game into a near-riot,” the Associated Press reported.
The next day, the stunned Celtics traveled to Philadelphia, where rookie phenomenon Wilt Chamberlain hit for 47 points and handed Boston its second defeat in a row.
Boston fans – which we aren’t, and we don’t even know any – could be forgiven a moment of panic as this two-game skid turned into a 2-and-6 slump. What was wrong with Red Auerbach’s team, and could it be fixed before the playoffs? This was the main topic of conversation in Boston that week, not the senator from Hyannis Port announcing a long-shot bid for the presidency.
More on that later, but here’s why we bring up a 65-year-old sports ticker in a 2025 financial newsletter:
You never know where you are in a timeline. What later historians – from their far remove – “know” to be “inevitable” is not the lived experience. Bringing it into the realm of personal finance, we often don’t know we’ve been in a recession until it’s over.
So, are we in a recession now?
Are we?
Maybe we’re already in a recession. Signals are mixed and we won’t know for sure for months.
The National Bureau of Economic Research, the arbiter of when American recessions begin and end, defines a recession as: “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
The NBER, however, stops short of defining “significant.” And “few”. Traditionally, the first is any negative quarter-over-quarter growth in gross domestic product. The second is six, that is, two quarters.
The problems with this definition are obvious. In the first quarter of this year, our economy contracted 0.3%. Let’s say we do that again so, over the course of six months, the U.S. economy shrinks around two-thirds of a percent. We would, by the usual metrics, be in a recession. If, however, economic activity plunged 7.9% but then recovered, that wouldn’t be a recession.
Unless the NBER says otherwise. During the first quarter of the Covid-19 pandemic, the economy did indeed plummet but, over the course of the following months, it bounced back. The Cambridge, Mass., based think tank declared February to April 2020 a recession, albeit the shortest on record: two months. And, if you think about it, that was probably the right call. So, if we continue to experience a very mild economic retrenchment, maybe the NBER will just shrug it off as half a year of economic doldrums and not invoke the R-word.
Recent history suggests that the current season won’t be remembered as a recession. We need only look back three years to find a point that looks a lot like today. The U.S. economy sank roughly the same in the first quarter of 2022 as it did in the first quarter of 2025 and, halfway through the second quarter, the economy appeared to still be weakening.
“Most of the data [the NBER is looking] at right now continues to be strong,” Treasury Secretary Janet Yellin, a former Federal Reserve chair, told NBC News’s Chuck Todd at the time. “I would be amazed if they would declare this period to be a recession, even if it happens to have two quarters of negative growth.”
She cited 2022’s burgeoning job market growth as an argument against recessionary talk. The current job market is also growing, if not as quickly as it did back then, so the logic holds. And, for what it’s worth, the economy eked out a miniscule gain in 2022’s second quarter, so the point was rendered moot.
No two alike
We’re not trying to be Pollyanna about the economy. If a recession is coming, or indeed is here, it could very well be deep, and could very well be long-lasting.
The Great Recession lasted from December 2007 through June 2009, but it’s not the longevity we remember. It’s the unemployment, the stock market crash and the complete, coast-to-coast cratering of the real estate market.
The oil shock recession lasted roughly as long, from November 1973 through March 1975, and engendered roughly the same unemployment rate – 9% versus 2008’s 10%.
But maybe this time it won’t get any worse than the eight-month-long recession of 2001. Unless you were highly leveraged to – or employed by – the tech sector, you were probably fine.
The 1990-91 recession had two triggers: the Gulf War and the savings and loan (S&L) crisis. Over the course of nine months, the economy shrank a barely measurable 0.1%, but the unemployment rate spiked to 6.8%. The Labor Department says 1.6 million Americans lost their jobs as a result.
Another problem with recessions – aside from not knowing when they started – is not knowing when they’re going to end. In every action movie, after the hero kills the Big Bad Boss, there’s a moment when he kisses the girl, gets a grudging nod of respect from the authority figure he blindsided, then … Up pops the bad guy’s chief henchman! Sometimes a recession is over, but not really.
The “Stagflation Recession,” which ran from January through July 1980, was induced by policies championed by Federal Reserve Chair Paul Volcker who focused on his mission to curb inflation at the expense of all other considerations. He capped inflation by dramatically raising interest rates, but that in turn threw a lot of people out of work. Then everything seemed to be all right for a year, until “Stagflation II: Volcker’s Revenge” was released. The 1981-82 recession brought even higher unemployment and even deeper economic contraction than the first in the series.
Going back several decades, the Great Depression of the 1930s was also a double-tap recession. The economy shrank every year from 1930 through 1933. Then it actually grew for four years until another recession hit in 1938. Even so, if you’ve ever talked with someone who lived through the Depression, they would tell you that four years of growth in the middle of the Depression wasn’t much to write home about. For most folks that lived through it, the 10-year stretch was just a decade of struggle. Even during the best of those times, unemployment barely dipped below 15%.
Cause and effect
Recessions are all the same in effect: loss of production, loss of jobs. They vary only in degree and longevity. The reasons are all over the map, though.
As we noted earlier, the Stagflation Recessions were self-inflicted. The Fed meant to do that.
Both the Great Recession and Great Depression were most immediately triggered by financial crises, but Wall Street is never the root cause. The financial community only reflects – and typically lags – what’s happening in the broader economy. In the more recent case, it was an oversold housing market and the predatory lending that encouraged it. In the earlier case, the Dust Bowl phenomenon that robbed America of much of its farmland had a lot to do with it.
Ultimately, though, both of those economic downturns were factors of reduced consumer confidence, and that is something we’re experiencing right now.
And that’s not the only trigger we’re staring down. Oil prices are dropping. Government spending is being curtailed. Home prices are declining. And then there are the tariffs.
Everything in the above paragraph can be taken as a positive from the perspective of national policymaking or personal politics. But we’re talking economics now and those factors – or even the threat of them – are disruptive in the short run.
The near-recession of 2022 was all about disrupted supply chains, and tariffs tend to have much the same effect. And let’s not argue about who directly pays tariffs (it’s the importers), they end up getting passed along to the consumer, so they’re inflationary – and remember what Volcker had to do to tame inflation in the early 1980s.
On the other hand, there’s little evidence that things right now are as bad as many feared they would be a couple months ago. (Things rarely are.) Inflation is low-ish. The job market is good-ish. The tariffs in effect are higher than they’ve been in four generations, but nowhere near the levels the White House had threatened.
The Federal Reserve Bank of Atlanta’s GDPNow estimate calls for 2.3% growth in the current quarter. Other forecasters aren’t quite that optimistic, but they generally believe that the second quarter will ultimately reflect modest growth.
If the economy should sputter again and we do lapse into recession, the big questions of how long and how deep remain. The answers to those questions have direct impacts on how a prudent investor allocates capital to ride out the bottom of the economic cycle and get in position for the eventual upswing.
The recap
What happened with the 1959-60 Celtics?
After a dismal couple of weeks, they got their mojo back. The Royals continued to be a nuisance that season – as recently as the early 2000s, the Celts had issues with the now-Sacramento Kings. And while it took Boston six games to get past Philly – now Golden State – in the playoffs, they claimed the 1959-60 crown, their second in a row. They would not relinquish it until 1967 and the Boston Celtics became the only major American sports franchise to ever 8-peat.
So, there’s not just hope for the U.S. economy right now, there is reason for optimism – but only if we have good coaching and are ourselves coachable.
This might be an opportunity to call a timeout, ride the bench for a couple minutes, and confer with the court-savvy veterans at Smith Anglin Financial.
