Periods of global recession tend to be associated financial system nearly came to a halt as with considerable economic and financial market liquidity constraints led to solvency concerns pain (Figure I-5). This is in part because, rather at systemically important financial institutions than simply a drop in demand or an increase exposed to securities tied to U.S. mortgage debt. in supply constraints, there is typically broader And in 2020, large portions of the global economy dislocation in macroeconomic fundamentals essentially shut down in efforts to stem the or the functioning of financial markets. In 1974 health risks of the COVID-19 pandemic. The and 1981, global economies were locked in a starting point for the global economy in 2022 stagflationary environment brought about by was stronger than in a typical year before a oil supply shocks and an unhinging of inflation global recession (Figure I-5): output and industrial expectations; that led to wages and prices activity were a little stronger and unemployment moving ever higher in a vicious cycle broken significantly lower. Taken at face value, a stronger only by substantial monetary policy tightening footing into the recession could result in a milder and ensuing recessions. In 2007, the global downturn supported by strong balance sheets. FIGURE I-5 Comparison: Global recessions versus now Percentage change – –    % Real per capita GDP growth Global energy consumption (year-over-year nustrial activity ine (year-over-year rae (year-over-year Gross omestic savings (year-over-year Global unemployment (year-over-year ypical global recession ear be ore global recession ­­­ Notes: Global recession years were 1975, 1982, 1991, 2009, and 2020. Year before includes the year before each, excluding 2019. Vanguard calculations are as of October 31, 2022. The typical global recession reflects the median result for each category in the global recession years. Sources: World Bank, British Petroleum Statistical Review of World Energy, OECD, Federal Reserve Bank of St. Louis FRED database, OeNB, CPB Netherlands Bureau for Economic Policy Analysis, UNCTAD, and Our World in Data, as of October 31, 2022. Global unemployment data and years of global recession are from Kose, Sugawara, and Terrones (2020). 11