1990–1991 Gulf War Recession
A short, shallow recession driven by the savings-and-loan crisis, an oil-price spike from Iraq's invasion of Kuwait, and already-deteriorating confidence. Unemployment kept rising for a full year after the NBER-dated trough — the first 'jobless recovery.'
What caused it
- •Savings-and-loan crisis peaking with the 1989 FIRREA resolutions
- •Oil price spike following Iraq's August 1990 invasion of Kuwait
- •Real-estate-led credit tightening following the 1980s commercial-property boom
- •Fed hiking from 1988 into 1989 to pre-empt inflation
The indicator playbook
The 1990 recession was forecast by the Conference Board LEI and by a sharp drop in consumer sentiment months ahead of the NBER peak. It was the first cycle where modern financial-conditions indices like the NFCI would have led the real economy cleanly.
What ended it
Fed easing from late 1990, the quick resolution of the Gulf War, and a collapse in oil prices by early 1991. Jobless growth persisted, helping to usher out the Bush administration in 1992.
Modern parallels
The savings-and-loan dynamic has echoes in post-pandemic commercial real estate and regional-bank stress. The Cleveland Fed's recession probability model, still widely cited today, became prominent after calling 1990 correctly.