ABSTRACT
The recession of 1953–1954 began in July 1953 and ended in May 1954. Two general conditions affected this recession that were not present in recession of 1948–1949. One was the continuation of the Korean War, which began in June 1950 and was ongoing for three years until the Armistice in July 1953 ended the fighting on the eve of the recession. The other changed condition was the shift in economic policy in 1951 that allowed the Federal Reserve to influence interest rates based on its view of the economy's needs. In March 1951, the Treasury Department and the Federal Reserve reached an agreement allowing the Federal Reserve to foster higher interest rates when it considered it desirable for the health of the economy. Generally, modest growth was interrupted by short-term growth spurts on the one hand and by absolute declines in demand in the civilian economy on the other hand.
