How Does The Dow Jones Industrial Average Perform After Recessions?

What happened to the Dow during recessions – and the year after recessions.

Gloom, stress, disappointment, and investment despair during January doesn’t always predict what happens the rest of the year. For example, Dow Industrial Average returns during the 5 worst Januarys since 1926 led to an average positive investment gain of 12.3% over 12 months and 26% over 24 months.

Dates

Dow returns during recession:

Dow one year after:

Comments

August 1929 to March 1933

-84.20%

81.07%

The winter of 1933 was hard and cruel, but the spring of 1933 brought a warmer and recovering economic climate.

May 1937 to

June 1938

-23.18

-2.43

Wall Street pit traders were busy with buy and sell orders. Wall Street remained open and active despite the downturn.

February 1945 to October 1945

21.33%

-9.35%

Hiroshima ended World War II. Even though the war ended, the U.S. economy remained in a recession, but the stock market kept going up.

November 1948 to October 1949

-0.12%

18.71%

The death of President Roosevelt (“FDR”) shocked Americans. President Harry S. Truman became president in the middle of another economic downturn.

July 1953 to

May 1954

21.57%

29.73%

Civil strife disrupted the United States during the early 1950s. Despite civil unrest, U.S. workers became hopeful and industrious in a post-war economy and society.

August 1957 to April 1958

-9.95%

36.83%

Russia’s Sputnik launch in 1957, challenged U.S. economic lethargy to compete internationally and in space.

April 1960 to February 1961

7.48%

6.94%

When a new president takes office, the economy became inspired to get out of yet another recession.

December 1969 to November 1970

-1.36%

4.69%

Business cycles are not unique in any economy. China’s Cultural Revolution against capitalism was the first of many steps toward an economic model.

November 1973 to March 1975

-19.04%

30.11%

The political chicanery called “Watergate” distracted the country until the U.S pulled troops out of Vietnam.

January 1980 to July 1980

11.51%

1.92%

Reagan’s “Morning in America” theme encouraged investors despite the national recession recession.

July 1981 to November 1982

7.40%

22.78%

War in the middle east and a recession at home did not keep some industry groups from positive performance during a difficult economic down turn and a difficult recession.

July 1990 to  March 1991

1.15%

11.04%

The first Gulf War did not prevent a flagging economy when Bill Clinton was elected president.

March 2001 to November 2001

-5.73%

-9.70%

$92 million tax rebate checks over 10 weeks were part of the Bush recovery plan. Markets continued to decline.

Source: BusinessWeek