This is basically explained by chatGPT (italics). One reason is the savings and loan crisis (banking industry), and the other is the Gulf War which caused the oil price to soar.

According to FDIC statistics, more than 2,900 institutions went bankrupt during the savings and loan crisis, with total assets of approximately $920 billion, accounting for about 19% of the average annual GDP during the period. Among them, about 1,300 savings and loan institutions went bankrupt or were taken over, with total assets of approximately $620 billion, making them the hardest hit area of ​​bankrupt financial institutions during the period (the rest were mainly commercial banks).

In short, combined with 2008, as long as it involves the bankruptcy of a large number of financial institutions, the recession will have a greater impact. The reason is that the bankruptcy of financial institutions is equivalent to the contraction of the entire market's money supply, which is more influential than the Fed's QT.

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Prior to the 1990 recession in the United States (1990-1991 recession), there were several key events and factors that contributed to this economic downturn. Here are some of the main events and the reasons behind them:

1. Savings and Loan Crisis
Time: mid-to-late 1980s to early 1990s.
Background: In the 1980s, the United States experienced a serious savings and loan crisis. Savings and Loan Associations (S&Ls) made large amounts of loans, but due to interest rate fluctuations and improper management, these institutions faced severe capital shortages.
Reason: In 1980, the Reagan administration relaxed regulations on S&L institutions, allowing them to engage in riskier investments. However, due to the decline in the real estate market and high-risk loan defaults, many S&L institutions went bankrupt. The government had to carry out large-scale financial rescues, which exacerbated fiscal pressures.
Impact: The savings and loan crisis led to instability in the financial system, undermined investor and consumer confidence, and indirectly promoted economic recession.
2. Gulf War
Time: Iraq invaded Kuwait in August 1990 and the Gulf War broke out in early 1991.
Background: Iraq’s invasion of Kuwait in 1990 led to escalating tensions in the Middle East, threatening global oil supplies and causing a sharp rise in international oil prices.
Reason: The Middle East is the world's main oil supplier, and the war has a direct impact on the oil supply chain. The rise in oil prices has increased production and transportation costs, leading to rising inflationary pressures.
Impact: Rising oil prices have hit the U.S. and global economies, increasing corporate costs, reducing consumer spending, and declining investment confidence, exacerbating economic weakness.
3. Federal Reserve’s Monetary Policy
Background: In response to high inflation in the early 1980s, the Federal Reserve implemented a tight monetary policy, gradually raising interest rates to curb inflation.
Reason: The Federal Reserve adopted a high-interest rate policy from the mid-1980s to the early 1990s. Although it successfully controlled inflation, it also increased borrowing costs and suppressed investment and consumer demand.
Impact: Higher interest rates reduce businesses’ willingness to invest and consumers’ ability to borrow, slowing economic growth. In 1990, interest rates were still high, setting the stage for a recession.
4. Real Estate Market Collapse
Background: In the 1980s, the U.S. real estate market experienced a period of prosperity, but after 1989, house prices began to decline.
Cause: Overbuilding, loose lending standards by financial institutions, and high interest rates combined to create a housing bubble that tanked as demand waned and house prices fell.
Impact: The decline in the real estate market has led to a recession in the construction industry, and demand in related industries (such as building materials, furniture, etc.) has dropped significantly, dragging down the overall economy.
5. Corporate Bankruptcies and Layoffs
Background: As economic growth slows, corporate profits decline, and some large companies go bankrupt or lay off employees.
Reason: In the early 1990s, many companies, especially in the retail and manufacturing sectors, faced declining profitability and had to resort to large-scale layoffs and cost-cutting measures.
Impact: Rising unemployment and falling consumer spending further deepened the impact of the recession.
Summarize:
The 1990 U.S. recession was the result of a combination of factors, including financial system instability (savings and loan crisis), external shocks (oil crisis caused by the Gulf War), tight monetary policy, and the bursting of the real estate market bubble. These factors interacted with each other, leading to a decline in investment and consumer demand, and ultimately triggered the 1990-1991 recession.