The Great Chaos
- Rumy Sen
- Apr 17
- 4 min read
Reduction in force. RIF. Downsizing. Rightsizing. Realignment. Restructuring. These euphemisms imply the same dreadful thing - being let go. Many around us are in this situation, some near and dear ones. The saga of unemployment, high prices and recession has a deeply entangled plot.
This weird time in history seems to be a harbinger of economic catastrophe, but is it? I wondered if the historical context would shed light on where we are headed vis-à-vis where we have been.
Believe it or not, the US has had over 30 recessions between 1857 and 2024.
Say what?!
Yes, this is indeed true. Since the 1930s, they have come with clockwork precision, about once a decade.
The Great Depression (1929-1939) is the worst of the lot. During this time, unemployment soared to 25%. 12M were out of jobs and those who had jobs saw their income go down by 42.5%. Farms folded, factories shuttered, mills and mines closed and people lost money in every segment of the economy. Businesses were decimated. Young people were unemployed, seniors fell into staggering poverty, nobody was spared. The GDP shrank by 50%.
What brought on the depression sounds familiar, like we’ve seen this story in our lifetime. Irrational investment euphoria followed by a stock market crash, a run on the banks, lack of financial sector liquidity and…drumroll…high tariffs and reciprocal tariffs. This was a perfect storm that upset the economy for a decade.
FDR’s New Deal saved the day.
It put money into the economy to stimulate growth. As expected, the conservatives hated the expansion of government and litigated much of the New Deal. Still, FDR withstood the hits and gave us fair labor laws, the FDIC, the SEC, Social Security, Tennessee Valley Authority and much more. He put people to work and strengthened the financial sector. The depression ceased when World War II spurred the economy and restored growth.
Next came a series of recessions with low to moderate GDP contraction.
The 40s delivered a post-war recession as the country transitioned to a peace time economy with GDP going down by 1.7%.
The 50s saw the Eisenhower Recession triggered by a global Asian Flu pandemic and overly tight monetary policies leading to a 3.7% downturn.
The 60s ushered the Rolling Adjustment Recession from the slowdown of the automobile industry due to foreign competition, giving us a 1.6% contraction.
The 70s brought a recession triggered by the oil crisis with a non-trivial 4.7% downturn.
The 80s saw a recession from using inflation to control unemployment, delivering a 3% contraction.
The 90s ushered the Gulf War Recession with GDP shrinking 1.5%.
The aughts saw the Dot Com Recession when the tech sector had a stroke. Even though this was painful, at its peak GDP only went down by 1.6%
The next episodes are particularly significant.
The Great Recession of 2007-09 saw GDP fall by 4.3% while the Dow Jones Industrial Average lost 50% of its value and unemployment hit 10% at the peak. The reasons, you ask? History repeating itself, of course.
In 2007, the exuberance was in the housing market. Lenders gave loans regardless of the borrower’s ability to pay back. Worse yet, the lenders immediately sold the loans to other financial institutions who then bundled and monetized the loans into instruments called Collateral Debt Obligations and traded them on Wall Street. While one part of the economy was giving loans without care, the other part was betting for these loans to fail. You can’t make this up! Before long, the economy tumbled when borrowers defaulted. The impact was felt acutely in housing, construction, retail and finance. Yet again, the federal government came to the rescue, pumping in 800B USD to rescue financial institutions and consumers. It took about eight years for the chaos to subside.
In 2020-22, the Covid-19 Recession was searingly painful. At its peak, GDP fell by 11.3% and unemployment hit 13%. The service sector was nearly wiped out. Healthcare took a bloody beating. IT soared along with sectors which were able to shift to remote work and remain afloat. Biden and Trump-the-First pumped 1.9T each to help the economy through the downturn. This made inflation go through the roof. Five years later, prices are still not down to pre-pandemic level even though unemployment has dropped significantly with the recovery of the service sector.
In 2025, just when the ship was on the verge of straightening, DOGE and the tariff war have fallen on us. We are again on the precipice of a recession, this time in less than a decade. Let’s call this potential downturn what it is: The Great Chaos of 2025.
The pending recession will not be spurred by irrational market exuberance or failures in the financial sector. It will be a direct result of the tariffs and unemployment. A stock market booming on the promise of AI has taken a nose dive. People are losing jobs, researchers are losing funding, doctors are reeling from anticipated insurance changes, HHS is cutting back massively, venture capitalists are absconding and companies are losing contracts. A perfect storm is brewing.
Nobody is disputing whether the bloat in the government needs trimming. No doubt currency manipulation by other countries and trade deficits are serious challenges which need to be addressed with urgency. To think the sudden and massive tariffs and layoffs won’t contribute to a downward economic spiral is likely a pot-induced thought. A nuanced solution to rectify the economic shortcomings while rebuilding the manufacturing sector would be advisable, but “nuance” is anything but cool now.
To think America once had a war because the country didn’t want to pay a tax on tea boggles my mind. What blows my mind completely is that history does not give us a roadmap of how to deal with the Great Chaos of 2025 because this will be the first recession triggered by policy alone and its aftermath.
May we all survive the tumult!

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