How MagnifyMoney Gets Paid

Advertiser Disclosure


Returning to Normal: How Long the Economy Takes to Return to Pre-Recession Levels

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Reviewed By

When the COVID-19 pandemic began, most of the economy was brought to a near-immediate standstill or a significant slowdown. With everyone on Wall Street and Main Street asking when and how it will end, there was no doubt a recession was here before the National Bureau of Economic Research (NBER) officially declared it June 8.As described by the NBER, recessions are a “significant decline in activity” that’s visible for a number of months in economic measures, such as employment, industrial production and income. Conversely, when declines in these measures reverse direction, the recession is over and a new economic expansion begins.

But for many people, the end of the recession is only half the story. Just because the recession has ended doesn’t mean the economy bounces back at the same rate it declined. While we can’t pretend to know how the 2020 recession will shake out, we can look at data from some of the more recent recessions, which show not only the lengths of recessions from the past 50 years, but also how long the economy took to get back to pre-recession levels.

To do this, MagnifyMoney compared metrics that measure five components of economic activity — employment levels, consumer spending, income (on a per person basis), industrial production and gross domestic product (GDP) — similar or identical to those the National Bureau of Economic Research (NBER) Business Cycle committee uses to determine when recessions begin and end. We then mapped how long each of these measures took to get back to the levels they were at prior to the onset of the last six recessions.

In addition, we looked at stock performance around recessions. Although the NBER does not factor stock prices into its analysis of the business cycle, the market often gets credit — albeit sarcastically so — for being a leading indicator: according to famed economist Paul Samuelson, it has “predicted nine of the last five recessions.”

Key findings

  • Getting back to pre-recession levels takes at least as long as the recession itself, as measured by key indicators that economists use to determine if we’re in a recession.
    • Recessions since 1973 lasted an average of 12 months, but for the economy to return to pre-recession levels, it took an average of 22 to 36 months to fully recover, as measured by personal incomes, consumer spending, industrial production and employment.
  • Industrial production takes the longest to completely recover, averaging 36 months over the past six recessions.
    • Employment levels have taken an average of 32 months to return to pre-recession levels.
    • Real incomes return to pre-recession levels the fastest. It’s taken 22 months on average for Americans to get back to pre-recession income levels since 1973.
  • We also looked at U.S. stock prices during and after these six recessions. Data indicates that stocks either recover almost immediately, as they did in 1980, 1982 and 1991, or take between three to five years to completely recover, as they did after 1973, 2001 and 2007.
  • The 2020 recession began in February. So far, most indicators are still falling, although stocks and personal income have rebounded.

Recessions since 1973 have been mild, severe and middling

Since 1973, the U.S. economy has endured six recessions, according to the NBER, the semi-official arbiters of declaring when recessions begin and end. On average, the six recessions have lasted for 12 months, though they’ve been as brief as six months and as long as 18 months.

The end of the recession isn’t the whole story though. Even when comparing brief recessions, sometimes jobs will quickly return (as they did in 1980), and other times, like in 1990-91, jobs won’t immediately return, leading to so-called “jobless recoveries.” And sometimes, after a deep recession ends, like that in 1981-82, most economic indicators quickly rebound; other times, like the most recent Great Recession in 2007-09, some economic measures like employment and income took years to return to a pre-crisis level.

Scenarios like these are why the financial media often adopts a shorthand to describe potential economic recoveries, such as V-shaped or U-shaped. What’s being described by this shorthand isn’t the recession itself, but a summation of the economic picture both during and after the recession. To borrow from the examples above, the 1990-91 recession would be described as U-shaped — where unemployment was a persistent problem even after the recession ended.

Looking at the recovery times of these economic indicators, it’s clear that the 2007-09 Great Recession has earned its title, as every economic measure took longer to recover than in the five preceding recessions. But determining which recession was mildest may depend on your perspective. For consumers, it appears the end of the double dip recession in 1982 was the mildest, as double-digit inflation came to an end and real incomes increased.

The metrics economists use to gauge economic health

When determining economic conditions, economists consider many monthly economic measures. While sometimes one or two of the measures may experience a temporary dip, if most of the other indicators are increasing, the economy is considered to be in a state of expansion. However, when most of these indicators drop simultaneously, a recession can be considered at hand.

Here’s how some of the indicators behaved during the past six recessions:

  • Gross domestic product (GDP): GDP encompasses all the consumption, investment and government spending occuring in the U.S. economy. So if GDP trends lower, it’s clearly a tipoff that a recession is at hand. (However, it’s not necessarily the case that two or more consecutive quarters of negative GDP is the definition of a recession, according to the NBER).Of the five economic metrics we measured, GDP fully recovers the fastest, on average. The quickest GDP turnaround was after the 2001 recession, when GDP exceeded its March 2001 peak in just nine months. However, in the most recent 2007-09 recession, it took 40 months for the economy to get back to where it was prior to the recession in December 2007.
  • Income: Personal incomes fall during recessions as unemployment levels increase, and generally rise during economic expansions as workers return to work. During the tech bubble recession of 2001, incomes recovered relatively quickly, taking only nine months to get back on track. It took 47 months for incomes to recover after the Great Recession.
  • Spending: Consumer spending naturally falls as incomes decline during recessions. But the length of time it takes for consumer spending to return to pre-recession levels appears to vary considerably, especially after you account for inflation. In two recessions, 1981-82 and 2001, consumers almost immediately began to reopen their change purses or pull out credit cards. But in other recessions, like in the 1973-75 and 2007-09 recessions, it took 35 and 61 months, respectively, for consumers to consume at the same level they did before the recession.
  • Employment. Employment appears to be the one metric that takes longer to recover with each ensuing recession, no matter how long or brief the actual recession was. So even though the 1973-75 recession was a relatively long 16 months, it only took 18 months for employment levels to reach pre-recession levels. After 1980, each employment level recovery took longer than the last one, ending up with employment levels not recovering after the 2007-09 recovery for an astonishing 78 months.
  • Industrial production: Although it doesn’t directly impact the American consumer, economists watch industrial production levels, as it’s a reliably cyclical indicator to determine if a recession is at hand. Industrial production also takes the longest, on average, to return to a pre-recessionary level, which has averaged 36 months over the past six recessions. In the 1973-75 and 1990-91 recessions, it took 20 months for industrial production to completely rebound. After the Great Recession, though it took 78 months to return to pre-recession levels.

Economists don’t factor in stock prices when determining if a recession is at hand. But stocks do decline during recessions, so clearly some information about economic health appears to be available in stock prices. However, it may not be completely reliable, especially for forecasting the end of recessions.

We looked at the total market capitalization of U.S. stocks (that is, the total dollar value of all stocks trading in the U.S., as valued by investors in a particular month) to see, as with the other economic measures we examined, what it could tell us about economic recoveries. What seems most apparent, however, is that stocks track secular bull and bear markets more than they track month-to-month economic conditions.

For example, it took only 17 months or less for stocks to fully recoup their losses after the recessions in 1980, 1981-82 and 1990-91, dates that occurred immediately preceding or during the 1982-2000 secular bull market, a decades-long cycle where stock prices tend to increase.

Conversely, stocks after the 1973-75, 2001 and 2007-09 recessions took between 44 and 59 months to recover. These periods were during what were widely considered secular bear markets, when stocks prices are either stagnant or in decline.

The 2020 recession begins

In June 2020, the NBER declared that the 2020 recession began in February. GDP, incomes, industrial production, personal consumption and employment have all initially declined from their respective February levels, sometimes at a record rate. As we’ve shown above, all of these measures declined at some point during each of the past six recessions.

Currently, except for per capita income, all key indicators remain lower than they were in February. Income is an exception due to the unprecedented one-time stimulus check most Americans received in April, as well as an $600 per week enhanced unemployment benefit laid-off workers received, which actually increased take-home pay for some. However, with the enhanced unemployment benefit due to expire July 31, income levels may no longer stay above the pre-recession level come August.


In May 2020, MagnifyMoney calculated how long it took key economic metrics to return to pre-recession levels over the past six recessions as denoted by the National Bureau of Economic Research (NBER). A metric was determined to have returned to a pre-recession level the first month after the recession that a level was higher than its highest point during the recession.

Stocks are measured in nominal dollars, other dollar denominated metrics, while GDP, income and personal consumption are measured in real terms. All dollar-based metrics — GDP, income per person and spending — are adjusted for inflation.

Sources include NBER (Recessions and GDP), Macro Advisers (GDP), Bureau of Economic Analysis (Real Disposable Income per Capita and Real Personal Consumption Expenditures per Capita), the Federal Reserve (Index of Industrial Production), the Bureau of Labor Statistics (Employment Level based on the monthly Household Survey) and Wilshire Associates (market capitalization of U.S. stocks).

How MagnifyMoney Gets Paid

Advertiser Disclosure


Typical Households Will Spend 17% Less in the COVID-19 Economy

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Reviewed By

Normally, household budgets don’t change drastically from year to year. The costs of some items may increase while others may drop, and usually the quantities purchased change slowly. Needless to say, these are not ordinary times.

Amid the COVID-19 pandemic, spending in some categories, like dining out and new appliances, have fallen by 50% or more. Meanwhile, spending on groceries is significantly increasing as supermarket shelves are cleared of everyday items.

These sharp changes in consumer spending patterns won’t be captured by the traditional governmental data sources for a number of months, though. The most recent official data from the Bureau of Economic Analysis (BEA) reported a decline in overall spending of 13.6% in April 2020. However, that only shows total spending in general categories. More comprehensive data on household spending, collected by the Bureau of Labor Statistics (BLS), takes more than a year to assemble even in an ordinary economic environment.

To measure how typical households are likely spending during the COVID-19 pandemic, MagnifyMoney mapped changes to household budgets, as measured by the Consumer Expenditure Survey. We found that typical household budgets will shrink by 17%, compared to spending prior to the pandemic.

Key findings

  • During the pandemic, typical household spending in 2020 is set to fall from $5,203 each month to $4,305 — a 17% decline. This estimate is based on after-tax spending, but still includes spending on Social Security and insurance.
    • This finding closely tracks the 13.6% decrease in overall personal consumption in April 2020, the first month after the COVID-19 pandemic was declared, according to the Bureau of Economic Analysis.

  • Households will likely find the biggest savings in defrayed transportation costs, followed by housing-related costs and the cost of going out to eat. We estimate the average amount spent per household on transportation — gasoline, new vehicle purchases, commuter rail and airfare that’s not being purchased — will fall by $198 a month for the average household. Housing-related costs will fall by $184 monthly, while the amount spent on going out to eat will fall by $139 a month, on average.
  • Some household costs, like groceries, will significantly increase, as more groceries are consumed. We estimate that households will spend 13% more on groceries than usual, as consumers substitute the food they ate away from home for grocery and pantry items.

How households are spending during the coronavirus pandemic


Before: $710 per Month
Now: $598 per Month

We’ll all still be eating of course, but the sources of those calories will change as families shift from eating out to in-home meals. We estimate, based on retail sales data, that the average monthly amount spent on food eaten away from home will fall by $162, while the amount of money spent on food eaten at home will increase by $50. Taken in total, that means the average family food bill will fall by $112, or 15.8%.

Restaurants across the country are either closing outright or transitioning to a delivery or takeout-only model for the foreseeable future. Even fast food and quick service restaurants, which have the advantage of curb-side shopping already built in via the drive-thru model, are reporting a 50% decline in sales in March. And many independent restaurants, if they haven’t already closed, are finding that restaurant delivery isn’t sustainable, as sales don’t come close to replacing pre-pandemic levels. Then there are all the office meals that are no longer being consumed in the cafeteria or at a desk — those are usually in-home meals now, too.

Meanwhile, grocers and warehouse markets are reporting record same-store sales increases as consumers stock up on virtually everything in anticipation of spending a number of weeks in isolation. Thankfully, there’s only so much toilet paper one household can buy, and in early April, big box retailers were already reporting that sales traffic was beginning to fall, which suggests that while families may still buy more food than usual to replace restaurant spending, the long shopping cart lines and empty shelves may be less common as the year continues.


Before: $1,709 per month
Now: $1,525 per month

As one may suspect, housing is the largest component of the American household budget. As measured by the BLS before the pandemic, the typical household devotes about 30% of its spending to housing, in the form of rent and mortgage payments, utilities costs and other housing-adjacent spending like property taxes and kitchen appliances.

Most of this spending won’t immediately change. Despite the quilt of mortgage and rent deferment remedies provided by various creditors and governments, for most, the monthly rent or mortgage payment will continue to be the most heavily weighted item in the consumer basket. The monthly cost will also remain the same, absent a household moving or changing the term of their mortgage or lease.

Some costs may increase. For instance, increased electric use from being home nearly all of the day, instead of only part of it, will increase the typical utility bill for those working from home.

Other types of household spending will likely decrease though. Durable goods spending — the new refrigerators and televisions of the American household — has fallen by 66% in comparison to April 2019 sales, according to the Advance Monthly Retail Sales survey. In addition, what the BLS terms “other lodging” will obviously fall as vacations are postponed — and those are considered housing costs, according to BLS methodology.

Although new dishwashers and hotel stays aren’t the bulk of housing spending, overall we estimate these changes will pull down overall housing costs by about 11%.


Before: $868 per month
Now: $670 per month

Transportation costs are the most difficult consumer spending category to estimate, as types of commuting and associated costs vary widely among households, even those with similar incomes. Costs will decline, but percentages will vary widely depending on the mode of transportation used. Some of these spending changes will impact nearly all households, but few households will see savings in all categories. Based on our estimates and the weighting used in the Consumer Expenditure Survey, the typical household may see transportation spending decline from $868 per month to $670 per month — a 23% decline.

Monthly transportation expense changes will depend on whether monthly household transportation costs persist through the economic shutdown (like car payments) or are no longer a factor (such as mass transit costs). Car payments, whether or not the vehicle is being used, will ultimately still need to be made, even if the lender agrees to defer payments (the average monthly car payment is nearly $500, according to recent LendingTree data). Plus, car-related expenses like registration and maintenance will also continue to be due.

But other transportation costs will decline. Fewer new cars will be purchased in the upcoming months, meaning fewer multicar families than before the crisis. Another major cost that’s being slashed is gasoline: Typically, the average monthly cost of gasoline is nearly $200, according to the Consumer Expenditure Survey. in April 2020 Driving decreased by 40% from 2019, according to Energy Information Administration data. And despite gasoline prices falling below $2 per gallon in most states, homebound consumers won’t repeatedly fill up their tanks — savings will result from simply using less gasoline. Meanwhile, those who no longer travel to work by mass transit may see their costs drop to zero, and many Americans won’t be traveling by air in the next few months.


Before: $155 per Month
Now: $17 per month

Setting jokes aside about sales of tops increasing and pants decreasing (because you don’t need pants for Zoom meetings, duh), clothing and apparel sales will decline significantly. This will partly be because of less demand, but also due to most in-store retailers and boutiques temporarily shuttering to help curb the spread of coronavirus.

If an 89% percent cut in clothing spending appears outlandish, consider the recent data from industry analyst Coresight Research, which estimates more than 60,000 retail stores temporarily closed in the weeks after the pandemic was officially declared in March. Most stores — according to Coresight, about 75% — are considered “discretionary retail,” a definition that encompasses clothing and apparel stores. So for many clothing retailers, their in-store revenue has effectively fallen to zero for the time being.

Clothing retailers are unlikely to be able to make up all the revenue with online sales either. Even before the pandemic, online retail of big department stores like Macy’s and Kohl’s represented only about a quarter of their total revenue. So while perhaps some of their mail order volume may modestly increase, it’s unlikely to even come close to replacing in-person spending.


Before: $265 per month
Now: $168 per month

Board game and jigsaw puzzle sales may be having a moment, but that bump in sales is unlikely to approach the $11 billion annual spending at the box office that Americans used to do each year. While ballparks and movies remain closed, spending, for now, falls to zero, and admissions are about a third of all entertainment spending. While those who already have online subscriptions to streaming service may continue to pay for them, new stay-at-home households aren’t necessarily going to splash out for a new subscription given the precarious economy. Other types of spending considered entertainment by the BLS, such as spending on music, hobbies and toys, may remain constant for households with a steady income.

Notably, this is the category in which pet spending is accounted for. The average household spends about $60 per month on pets, according to the BLS, and that will likely remain constant throughout the pandemic.

Finally, although some may categorize vacation spending as entertainment, that’s not how it appears to the BLS, which distributes vacation spending on things like airfare and hotels among transportation and housing categories.

Health care

Before: $421 per month
Now: $380 per month

While one may expect health care spending to soar during a health crisis, costs will remain similar — at least in the short term. There has been some additional spending noted for medical supplies, but the bulk of household medical spending is for health insurance.

That said, tens of millions of workers became immediately sidelined as businesses closed amid the pandemic. While some employers kept furloughed workers on health care plans, many did not, and naturally the expenses for these households will change dramatically. Additionally, some experts are reporting that health care premiums may increase by as much as 40% or more in 2021, as insurers pass on the costs of the pandemic to the insured. So while health care costs are roughly the same in the short-term, that will likely be short lived.

Other costs

Before: $1,076 per month
Now: $946 per month

Finally, there are other types of household spending that you probably don’t notice, such as the portion of your paycheck that is set aside for Social Security, newspaper subscriptions, charitable contributions and personal care services like haircuts. Some of these costs may experience a change if, for example, certain economic proposals like a payroll tax holiday come to pass. In addition, if household incomes fall sharply due to reduced employment, then payments into Social Security will also decline.

While personal incomes showed a one-time jump in April (thanks largely to economic impact payments and enhanced unemployment insurance), overall spending declined in that month by 13.6%.


In May 2020, using data from the Bureau of Labor Statistics’ Consumer Expenditure Survey, MagnifyMoney estimated how much the typical American household budget might change as a result of the COVID-19 pandemic. Estimates are based on recent observable declines in most retail sales data from the Census Bureau, and for non-retail expenditures, industry unit and revenue data.

These estimates are based on household averages, which vary widely. In general, the typical household, as measured in this survey, has two to three household members and between one and two workers and owns two vehicles. Single-person and large households, among other types, will naturally have different spending profiles.

How MagnifyMoney Gets Paid

Advertiser Disclosure

Credit Cards, Featured, News

Average U.S. Credit Card Debt

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Credit card balances are at all-time highs, and absent any other relief, the recent rate cuts by the Federal Reserve will do little to slow down growth in total balances that borrowers carry month to month. And while it’s still too early to know for certain, the cash crunch many households are experiencing in 2020 due to the COVID-19 pandemic may mean even greater average monthly balance increases than in recent years.

We’ve updated our statistics on credit card debt in America to illustrate how much consumers are now taking on.

  • Americans paid banks $121 billion in credit card interest in 2019. That’s up 7% from $113 billion in interest paid in 2018, and up 56% since 2014.
  • In February 2020, the average APR on credit card accounts assessed interest was 16.61%. Although the Federal Reserve has cut the key Federal Funds rate by two percentage points since mid-2019, the more recent cuts aren’t yet reflected in lower interest assessed to balances carried from month to month.
  • Total revolving credit balances are $1.05 trillion, as of February 2020. The vast amount of this balance is from spending on credit cards from banks and retailers, while $83 billion comes from revolving balances, such as overdraft lines of credit.
  • Americans carry $687 billion in credit card debt that isn’t paid in full each month. This estimate includes people paying interest, as well as those carrying a balance on a card with a 0% intro rate.
  • 43.2% of credit card accounts aren’t paid in full each month. Those who don’t pay in full tend to have higher balances, which is why the percentage of balances not paid in full (71%) is higher than the percentage of accounts not paid in full (43.2%).
  • The average credit card balance in 2019 was $6,194 for individuals with a credit card. That’s an increase from $6,040 in 2018.

Credit card use

  • Number of Americans who actively use credit cards: 184 million as of 2019, according to TransUnion.
  • Number of Americans who carry credit card debt month to month: 77 million.
    • We estimate 42% of active card users carry debt month to month, based on the Fed’s Survey of Consumer Finances.

Credit card debt

  • Total credit card debt in the U.S. (not paid in full each month): $687 billion
  • Average APR: 16.61% (also excludes those with a 0% promotional rate for a balance transfer or purchases). This estimate comes from the Federal Reserve’s monthly reporting of APRs on accounts assessed interest by banks.

The above estimates only include the credit card balances of those who carry credit card debt from month to month — they exclude balances of those who pay in full each month.

Credit card balances

  • Total credit card balances: $1.05 trillion as of February 2020, an increase of 3.3% from February 2019. This includes credit and retail cards, and a small amount of overdraft line of credit balances.
  • Average number of credit cards per consumer: 3.1, according to Experian. This doesn’t include an average of 2.5 retail credit cards.
  • Average credit card balance: $6,194. The average consumer has $1,155 in balances on retail cards.

The above figures include the credit card statement balances of all credit card users, including those who pay their bill in full each month.

Who pays off their credit card bills?

In 2019, fewer accounts were paid in full than accounts with a balance carried from month to month. According to the American Bankers Association:

  • Revolvers (carry debt month to month): 43.2% of credit card accounts
  • Transactors (use card, but pay in full): 31.1% of credit card accounts
  • Dormant (have a card, but don’t use it actively): 25.6% of credit card accounts

Delinquency rates

Delinquency rates peaked in 2009 at nearly 7%, but in 2019 delinquency rates were 2.6%, historically well below the long-term average.

Credit card debt becomes delinquent when a bank reports a missed payment to the major credit reporting bureaus. Banks typically don’t report a missed payment until a person is at least 30 days late in paying. When a consumer doesn’t pay for at least 90 days, the credit card balance becomes seriously delinquent. Banks are very likely to take a total loss on seriously delinquent balances.

Debt burden by income

Those with the highest credit card debts aren’t necessarily the most financially insecure. According to the 2016 Survey of Consumer Finances (the most recent data available), the top 10% of income earners who carried credit card debt had nearly twice as much debt than the average borrower.

However, people with lower incomes have more burdensome credit card debt loads. Consumers in the lowest earning quintile had an average credit card debt of $2,100. However, their debt-to-income ratio was 13.9%. On the high end, earners in the top decile had an average of $12,500 in credit card debt, though their debt-to-income ratio was just 4.8%.

A look at American incomes and credit card debt

Income percentileMedian incomeAverage credit card debtCredit card debt-to-income ratio

Source: 2016 Survey of Consumer Finances data

Although high-income earners have more manageable credit card debt loads on average, they aren’t taking steps to pay off the debt faster than lower-income debt carriers. If an economic recession leads to job losses at all wage levels, we could see high levels of credit card debt in default.

Generational differences in credit card use

In Q2 2019, Generation X cardholders had the highest credit card balances. The average cardholder from this generation had a balance of $8,215, according to Experian. Baby boomers held an average balance of $6,949, comparatively.

At the other end of the spectrum, millennials — who are often characterized as frivolous spenders — held significantly lower credit card balances, at $4,889. They also carry fewer (3.2) of credit cards in their wallets. Generation X carry 4.3 credit cards and baby boomers have 4.8 credit cards, on average.

How does your state compare?

Using data from Experian, as well as data from the Federal Reserve Bank of New York Consumer Credit Panel and Equifax, you can compare average credit card balances by state.

Differences in credit card debt by generation

In 2019, Generation X had more credit card debt, on average, than baby boomers, as those in their mid-40s typically have the largest amount of expenses relative to both younger and older consumers.


In February 2020, MagnifyMoney collected and analyzed credit card data from government and industry sources, including the American Bankers Association, Federal Reserve, the Federal Deposit Insurance Corp., Experian, TransUnion and Equifax, to determine average credit card balances, interest rates, usage and delinquency rates.