Income tax and Recessions - all the good stuff...

While searching for a topic, I came across a striking graphic on the St. Louis Fed Bank data website.

I was examining data on Federal Income, which includes taxes and other sources of income. 

What caught my attention was the background of the data field, (carefully hidden in plain sight...) displaying recessions (over 2 quarters of negative growth) and depressions (over 12 quarters or 3 years of negative growth) as grey vertical bars behind the data points. This background is on most of US data sets provided by the Fed through "FRED", their online repository for economic data.

https://fred.stlouisfed.org/graph/fredgraph.png?g=1E46n&height=490

Recessions during the 1901-1930 period were frequent, and prolonged. The 1930 recession was of course the Great Depression, and while it was technically a depression only for about 5 years, it’s effects continued nearly 10 years up to the start of WW2 in 1941.

Growing up in the 1970s and 1980s, I recall numerous disruptions, which I now recognize as multiple recessions.. Over time, recessions have become shorter and less frequent, shifting from occurring approximately every 5 years in the post-war period to an average of every 10 years today.  

If not for the recent Covid pandemic, we would be approaching 16 years without a recession, as the pandemic's impact was limited to a single negative quarter.  That record of growth and stability would have seemed remarkable to an economist working for the Federal Reserve when it was founded in 1913.

Undoubtedly, the creation of the Fed in 1913, its commitment to data-driven economics and the making extensive economic data widely available have been crucial in fostering economic stability and prolonging economic expansions.

That data has facilitated robust economic debates grounded in reliable data and have aided in maintained the US's economic leadership, even as it faces its most significant challenges since WW2.