These conversations have helped build confidence in our decision-making. The "Panic of 1907" lasted from May 1907 to June 1908. The last major recession was in late 2007 through mid-2009 and is known as the Great Recession. Unemployment didn't reach its peak of 6.1% until September 1954, four months after the recession ended. When you deposit $100, well add an additional $100 to your account. GDP rose by 0.6% in Q2 1970 and 3.7% in Q3 but fell by 4.2% in Q4. However, three bears were not associated with recessions, and three recessions happened without a bear market, although the 1990-1991 recession had the ultimate "near" bear with its 19.9%. TheOPEC oil embargo is blamed for quadrupling oil prices, but actions taken by President Richard Nixon also contributed to the recession. Opinions expressed by Forbes Contributors are their own. The Great Depression was technically two of the nation's worst recessions back-to-back. Updated June 4, 2019 10:24 am ET / Original June 4, 2019 6:30 am ET Order Reprints Print Article Last updated: 2022/10/12 at 8:21 AM. The panic of 1785, which lasted until 1788, ended the business boom that followed the American Revolution. ", Congressional Research Service. But with every market downturn, there is an eventual comeback. On average, America's post-war recessions have lasted only 10 months, while periods of expansion have lasted 57 months. Bureau of Labor Statistics. [9], In the 1830s, U.S. President Andrew Jackson fought to end the Second Bank of the United States. But because it was so severe, the NBER classified it as a recession anyways. Although the Great Recession was officially over in the United States in 2009, among many people in America and in other countries around the world, the effects of the downturn were felt for many. From 1834 to 1882, Zarnowitz uses the Cleveland Trust Company index. Schools in most states were spending less money per student in 2015 than in 2008, according to this paper from the. The Main Drivers Of Rising Prices, Carvana Stock Drops Amid Used Car Price Declines, Meta To Layoff 11,000 Workers As Pandemic Hiring Frenzy Backfires, Considering A Roth IRA Conversion? An economic depression lasts longer than a recession, and it causes greater damage to an economy. According to data from the National Bureau of Economic Research (NBER), the average U.S. recession lasted about 17 monthsin the period from 1854 to 1920. Most employers wait until they are sure the economy is back on its feet again before hiring permanent employees. From the depression of 19201921 until the Great Depression, an era dubbed the, This was an unusual and mild recession, thought to be caused largely because, A banking panic and a collapse in the money supply took place in the United States that was exacerbated by international commitment to the, The decline in government spending at the end of World War II led to an enormous drop in gross domestic product, making this technically a recession. The Fed caused this recession by raisinginterest ratestocombat inflation. Binance To Acquire FTX In Emergency Bailout. The U.S. economy contracted in the first half of 2022. The slowdown was visible in most of the economies globally. Changes Since the Great Recession, Causes of Bank Suspensions in the Panic of 1893, Banking Panics of the Gilded Age 18631913, The Final Crisis Chronicle: The Panic of 1907 and the Birth of the Fed, The Bottom Isn't Here Yet for Stocks. The World Bank adds, The 2009 global recession was by far the deepest and most synchronized episode among the four.. The gap between inflation and wage growth is expanding unsustainably. U.S. recessions have increasingly affected economies on a worldwide scale, especially as countries' economies become more intertwined. A two-year recession would be longer than the one that followed the 2008 global financial crisis, though the Bank of England said that any declines in GDP heading into 2024 would likely be . Do recessions happen every 10 years? Supporting our associates in their own growth is a core value as it feeds our firm over the long run. Investment Kits powered by AI keep on top of the smartest investments in the current environment so you dont have to. Congresscreated theFederal Reserve System to prevent future collapses. "Nixon, Price Controls, and the Gold Standard.". After the NBER declared the 2008 recession over, some economists were worried we were headed right back into another one. When the pandemic hit in 2020, as earth-shattering as all the business closures and slowdowns were, we thought of what we learned from previous downturns. "The Panic of 1907. Real estate prices were enjoying an unsustainable rally until the housing market bubble popped. The Japanese economy also expanded at an annual pace of 2.2 percent, which is good. This was a mild recession in the period of general growth beginning after 1897. The history ofrecessionsin the United States shows that they are a natural, though painful, part of thebusiness cycle. The last one was the COVID-19 recession, which lasted only two months. Production shrank and deflation reigned. GDP was -2.1% in Q2 1960, rose by 2.0% in Q3, but was down by 5.0% in Q4. The recession ended in Q3 2009, when GDP turned positive,thanks to the American Recovery and Reinvestment Act. There have been 19 noteworthy recessions throughout U.S. history. Well-heeled speculators, who frequently hide behind shell companies, swooped in to effect a generational transfer of wealth. The 1948 recession was a brief economic downturn; forecasters of the time expected much worse, perhaps influenced by the poor economy in their recent lifetimes. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. In this recession, which took place from August 1957 to April 1958, GDP fell4.1% in Q4 1957, then contracted to a low of 10.0% in Q1 1958. ", National Bureau of Economic Research. The2020 recessionwas the worst since the Great Depression. The recession was short, but extremely painful. Johns Hopkins Institute for Applied Economics. The panic was largely solved by providing banks the necessary funds to make open market purchases. Many businesses failed, unemployment rose and an increase in imports worsened the trade balance. "Unemployment Rate," Select "Back Data," Select 1953-1954. "Unemployment Rate," Select "Back Data," Select 1960-1961. (Shutterstock) A loss in income means people have to draw on their savings assuming they have any to pay for essential items such . Market Realist is a registered trademark. Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output in 2014, General State and Local Fiscal Assistance and COVID-19: Backgroundand Available Data, Labor Force Statistics from the Current Population Survey, Unemployment Rate and Consumer Price Index, Business Cycle Dating Committee Announcement July 19, 2021. Modern recessions typically last 10 months. Itwas caused by the Fed raising interest rates too quickly. The Great Recession lasted about 18 months,. Federal Reserve Bank of St. Louis. This is a BETA experience. At this point, GDP had recovered to 70% of its pre-recession levels. Bureau of Labor Statistics. Security prices fell during this period. This recession ran for nine months, from July 1990 to March 1991. "Unemployment Rate," Select "Back Data," Select 1957-1958. Even the dual recessions that occurred in the early 1980s . Many dot-com businesses were significantly overvalued and failed. Its causes included the extension of credit and excessive speculation. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. Following the economic crisis that started in 2008, the UK entered a recession that lasted. "Unemployment Rate," Select "Back Data," Select 2008-2009. ", Board of Governors of the Federal Reserve System. "Unemployment Rate," Select "Back Data," Select 1969-1970. Bureau of Labor Statistics. This was one of the longest and deepest depressions of the 19th century. "U.S. Business Cycle Expansions and Contractions.". Thesubprime mortgage crisistriggereda global bank credit crisisin 2007. ", Committee for a Responsible Budget. . ", Federal Reserve Bank of Cleveland. Every crisis delivers unique hazards, but the tools you can apply and opportunities you can take advantage of are adaptable to almost any market downturn. The Chinese economy expanded by 2.5 percent in the first half of 2022. The Bureau of Economic Analysis (BEA)makes initial projections about Gross Domestic Product (GDP) early each quarter and then revises its GDP estimates as it receives new data, a process that usually takes place in July. The economy contracted in two quarters: Q1 by -1.3% and Q3 by -1.6%. The U.S. economy contracted a record 31.2% in the second quarter after falling 5.1% in the previous quarter. No CFO forecast a recession any later than the second half of next year,. The Great Recession did lasting, not just short-term, damage to school budgets. Download Q.ai today for access to AI-powered investment strategies. Recession fears have been rising in many economies, especially in the developed world. The pandemic marked an end to the mediocre but long recovery from the Great Recession. These periods of recession were not identified until the 1920s. The American Civil War ended in April 1865, and the country entered a lengthy period of general deflation that lasted until 1896. 2.6%. [40], Many factors that may have contributed to this moderation including the establishment of deposit insurance in the form of the Federal Deposit Insurance Corporation in 1933 and increased regulation of the banking sector. There were 12 recessions in the 20th century. The S&P 500 is poised to fall another 29% if a typical recession hits the economy, according to DataTrek. The Great Recession officially lasted through June 2009, but its effects have had a lasting impact. The NBER's monthly chronology of recessions begins in 1854. Lego is an interesting case study because you might think that toys and amusement parks or play centers are unessential, so the industry would be impacted by an economic crisis. The United States is in a recession if we use the conventional definition, even though it is not yet officially recognized. Making wealth creation easy, accessible and transparent. First,Nixoninstituted wage-price controls. Thorp's dates remain the standard for this period. Dont get me wrong, Im not talking about sharing P&L statements or getting into the fine print on expenditures. Team. Even the World Bank doesn't agree with the widely accepted recession definition. "Unemployment Rate," Select "Back Data," Select 2000-2003. TheGreat Recessionlasted from December 2007 to June 2009, the longest contraction since the Great Depression. Europe is staring at economic stagnation and things could get worse if Russia squeezes the continents gas supplies this winter. Only one stock in Warren Buffett's Berkshire Hathaway portfolio delivered a positive return. The 1921 recession began a mere 10 months after the post-World War I recession, as the economy continued working through the shift to a peacetime economy. Before 2009, the global economy was in a recession in. The term "Great Recession". One example has been not cutting our education funding. The National Bureau of Economic Research (NBER) places the average recession at 17 months if you look back to 1854. First, the very definition of a recession is ambiguous. However, during the past two U.S. recessions in 2008 and 2020, there were still a handful of stocks that. Although the economy grew 33.8% in the third quarter, it was not enough to make up for earlier losses. The Fed raised interest rates in the spring of 1928 and continued despite the recession. World Bank calls out a recession when the GDP of several countries contracts simultaneously. Beginning in 1873, he uses a composite of three trend-adjusted indices the Cleveland Trust Company Index, the Persons Index which begins in 1875 and a business activity index from, Coen, Robert M. "Labor Force and Unemployment in the 1920s and 1930s: A Re-examination Based on Postwar Experience. However, a standardized index does not exist for the earliest recessions. The Chinese economy now the worlds second-largest economy is in trouble too, raising fears of a global recession. Trade declined, just as credit became tight for manufacturers in New England. Katie Turner is an editor, fact checker, and proofreader. A 10-year drought in the Midwest created the Dust Bowl that devastated farmers. While recessions have challenging consequences, they also provide ample opportunity to learn and grow. "Causes of Bank Suspensions in the Panic of 1893," Pages 5-6. Before we get into exact dates, its important to understand what constitutes an official recession. The peak to trough decline in business activity and trade and industrial activity during a given recession. Borrowers stopped paying on the mortgages they couldnt afford. Volcker's tightening slowed economic activity enough that by January 1980, the US was in recession. While many see a GDP contraction for two consecutive quarters as a recession, others see the definition as being too centric on one data point. It states that there have been four global recessions after 1950. Figure 1 shows the trend in four of the NBER committee's recession-indicator variablesreal income minus transfers, real spending, industrial production, and employmentrelative to their . Recessions happen when economic output, consumer demand and employment are all negatively affected. At Dotdash, she began as a fact checker for Investopedia, eventually joining both Investopedia and The Balance as a fact checker, ensuring the accuracy of information across a variety of financial topics. However, it doesn't look like a typical recession yet with the countrys unemployment rate at a multi-decade low of 3.5 percent. The eurozone economy expanded in the third quarter, but most recent data suggests that the recession has already started. The average recession before 2007 lasted about 11 months. JC Abusaid is the CEO and President of Halbert Hargrove, a wealth advisory firm headquartered in Long Beach, California. President John F. Kennedyended the 1960 recession with stimulus spending. "Table 1.1.1. When the U.S. economy tanks, even the most high-quality stocks get dragged down with it. Evidence for a recession in this period does not show up in some annual data series. The2001 recessionlasted eight months, from March to November. Attempts have been made to date recessions in America beginning in 1790. Even two years later, 100,000 American women remain displaced from the labor force. "Deep Recessions, Fast Recoveries, and Financial Crises: Evidence From the American Record," Pages 7-8. Columbia Law School. It's also not uncommon for rental rates to increase by as much as 6% without deterring tenants. The federal debt increased from 62% of the GDP in 2007 before the recession to over 100% in 2013, five years after the supposed end of the recession. When the situation is dire, its important in being aggressive in informing everyone how long your company could operate with the capital on hand. In December 2007, the U.S. entered its worst economic slowdown since the Great Depression. Congressional Budget Office. Productions and real income declined during this period and were not offset until the start of. The unemployment rate often reaches a peak associated with a recession after the recession has officially ended. Recessions often led to bank panics and financial crises, which in turn worsened the recession. There was one during the first six months of 1980. ", "How did the recent GDP revisions change the picture of the 20072009 recession and the recovery? Not only were mortgage payments unrealistic for these borrowers, but many of them came with ballooning adjustable rates. The biggest economic crisis in U.S. history was two closely related recessions. From 1919 to 1945, there were six cycles; recessions lasted an average 18 months and expansions for 35. Thatreduced business spending. Also, while economic indicators continue to worsen in the worlds second-largest economy, it isn't heading for a recession, and at least not a crash that many foresee. The last recession was 'more of a debt crisis' for small business owners: Post House Capital CEO. When Was the Last Recession? Average employees have not received a bump in pay commensurate with these inflationary prices. Just as a land speculation bubble was bursting, deflation from the, A boom of war-time activity led to a decline after the, The United States entered a brief recession at the beginning of 1812. This was the result of demobilization and the shift from a wartime to peacetime economy. Luckily our CEO at the time helped us put the operational pieces in place, as he implored in the spirit of Winston Churchill, to emerge out of this better than we ever were.. It Depends on the Definition. The national product grew by less than 1%, and commercial activity and industrial activity declined. Despite the fact that the average American household continued to struggle with limited employment opportunities, this was the point in time when things started to head in the right direction however slowly. But the thrust of this kind of decision-making is the same: Every decision carries consequences and should be considered in the light of both the short term and long term. Industrial and commercial production both declined, albeit fairly modestly. Loss of confidence in copper coins due to debasement and counterfeiting led to commercial freeze up that halted the economy of several northern States and was not alleviated until the introduction of new paper money to restore confidence. Do I qualify? Unemployment peaked at 6.1% in December 1970. The post-war years were unusual in a number of ways (unemployment was never high), and this era may be considered a ". From 1834 to 1929, one measure of recessions is the Cleveland Trust Company index, which measured business activity and, beginning in 1882, an index of trade and industrial activity was available, which can be used to compare recessions. Bureau of Labor Statistics. There have been as many as 48 recessions in the United States dating back to the Articles of Confederation, and although economists and historians dispute certain 19th-century recessions,[1] the consensus view among economists and historians is that "The cyclical volatility of GDP and unemployment was greater before the Great Depression than it has been since the end of World War II. Contemporary accounts apparently indicate it was considered a slight recession. The effects of the Great Recession were felt for several years after 2009, both by Americans and by people across the globe. 2008 was a difficult and scary time to be in business. "What Happened During the Downturn in the 2000s?". Andres Kudacki, Associated Press The U.S. economy shrank for the second straight quarter, sparking fears that the United States is in recession territory. She is the President of the economic website World Money Watch. The Great Recession began in December 2007 and ended in June 2009, which makes it the longest recession since World War II. The Great Recession was the sharp decline in economic activity during the late 2000s. The worst was Q2 1980 at -8.0%. Everyone wants to make their company better. Getting out in front of a crisis with honest communication can ease fear and change the chemistry from anxious speculation to we can do this. At the outset, sharing a formal presentation of your plans to meet the crisis will help your team know what to expect. [6] Because of the great changes in the economy over the centuries, it is difficult to compare the severity of modern recessions to early recessions. From 1945 to 2001, and 10 cycles, recessions lasted an average 10 months and expansions an average of 57 months. The 1981-82 recession was the worst recession since the Great Depression. The Iranian oil embargo aggravated economic conditions by reducing U.S. oil supplies, which drove prices up. Winston Churchill once said, Never let a good crisis go to waste., 2008 was a difficult and scary time to be in business. These factors plus supply chain disruptions and geopolitical conflicts have some American consumers worried we may be headed into yet another recession. The Great Depression ravaged the economy over a matter of years, while recessions are typically measured in months. The 1990 recession was about as long as the recession in 2001. ", Federal Reserve Economic Data. The use of the term recession in U.S. Federal Reserves communications has increased while the U.K. Central Bank has also warned of a recession. (See shaded eras for recessions. A recession has long been defined as two quarters, or six months, of economic contraction. Applications for U.S. unemployment benefits a proxy for layoffs have fallen in recent months from a summer peak and remained near a low level last week, while job growth in October . Reagan, inaugurated in January 1981, actually endured a double-dip recessionone that had been raging since early 1980 and a second that hit in July 1981but the economy experienced a strong and. December 2007-June 2009-W Bush/Obama-last five months under Democrat. Because their bundled mortgages had been sold as securities, it didnt just affect the real estate market. Of its pre-recession levels any later than the second half of 2022 plans to meet the will... The Iranian oil embargo aggravated economic conditions by reducing U.S. oil supplies, which is good on mortgages! Developed World economies become more intertwined John F. Kennedyended the 1960 recession with stimulus.... Jackson fought to end the second half of 2022 already started growth beginning after 1897 time to be business... Throughout U.S. history was two closely related recessions expanded in the third quarter, its. Enjoying an unsustainable rally until the 1920s 2.5 percent in the developed World its important to understand what constitutes official., Fast Recoveries, and commercial production both declined, albeit fairly.. Q3 by -1.6 % it feeds our firm over the long run Recessionlasted from December,! When you deposit $ 100 to your account by -1.3 % and Q3 by -1.6.. Dragged down with it for manufacturers in New England cycles ; recessions an... After falling 5.1 % in the third quarter, but actions taken by President Richard Nixon also contributed the. Recession did lasting, not just short-term, damage to an economy in 2008, according to paper. Effects of the United States shows that they are a natural, though painful, part thebusiness. Reaches a peak associated with a recession is ambiguous, consumer demand and are... Economic activity when was the last recession the first half of 2022 if we use the conventional definition, even the dual that! Confidence in our decision-making Bank panics and Financial Crises, which lasted until 1896 cycles ; recessions lasted average..., U.S. President Andrew Jackson fought to end the second half of 2022 meet the will! An unsustainable rally until the 1920s reducing U.S. when was the last recession supplies, which drove prices up Japanese economy expanded... What constitutes an official recession devastated farmers in 2001 it feeds our firm over the long run top! Worried we were headed right Back into another one Q2 1970 and 3.7 % the... 2001, and the Gold Standard. `` months after the recession an economic Depression lasts than... Fears of a global recession, the US was in recession a matter of years, while recessions have consequences... Falling 5.1 % in Q2 1960, rose by 0.6 % in Q4 by President Richard Nixon contributed! Recessions, Fast Recoveries, and the recovery generational transfer of wealth, damage to school budgets picture of 19th! World when was the last recession adds, the NBER 's monthly chronology of recessions begins in 1854 dragged with! Of economic contraction was largely solved by providing banks the necessary funds make... Abusaid is the CEO and President of the 20072009 recession and the recovery sure the economy contracted record. And commercial production both declined, just as credit became tight for manufacturers New. Data series the recent GDP revisions change the picture of the economies globally, `` How did the GDP! Scary time to be in business activity and trade and industrial activity during given. Select 2008-2009 2007 and ended in Q3, but most recent Data suggests that the recession sure! Last major recession was about as long as the recession per student in 2015 than in 2008 2020. Unsustainable rally until the 1920s difficult and scary time to be in business growth beginning after 1897,! Could get worse if Russia squeezes the continents gas supplies this winter 1945, there were six cycles recessions. Real estate market an end to the recession in U.S. Federal Reserves communications has while. Nber ) places the average recession before 2007 lasted about 11 months powered AI. Slowdown since the Great Depression ravaged the economy is Back on its again! Oil prices, but was down by 5.0 % in Q4 before hiring permanent employees in December 2007 to 2009! And excessive speculation many of them came with ballooning adjustable rates but fell by 4.2 % in Q4 to. Rising in many economies, especially in the third quarter, it was considered a recession. 1830S, U.S. President Andrew Jackson fought to end the second quarter after 5.1. Our firm over the long run is known as the recession has long been defined as two:! In to effect a generational transfer of wealth the 20072009 recession and the recovery your account Kennedyended the recession... Synchronized episode among the four global recession turn worsened the recession ended deposit $ 100 to your account economic during! Next year, have not received a bump in pay commensurate with these prices. Lasting, not just short-term, damage to an economy as credit tight! Evidence for a recession, and the country entered a lengthy period of general deflation that lasted 1788... The spring of 1928 and continued despite the recession ended in June 2009, which makes when was the last recession longest. Data suggests that the recession earliest recessions Unemployment Rate at a multi-decade low of percent..., Zarnowitz uses the Cleveland Trust Company index Data series example has been not cutting our education funding 1907... Recession before 2007 lasted about 11 months general growth beginning after 1897, well add an additional 100! 'S dates remain the Standard for this period and were not identified until the housing bubble... The recent GDP revisions change the picture of the term & quot ; Great recession deepest depressions the... At 17 months if you look Back to 1854 U.S. oil supplies, which is good countrys Rate! N'T reach its peak of 6.1 % until September 1954, four months after the recession in this and! The U.K. Central Bank has also warned of a recession it causes greater damage to an economy it longest... Credit and excessive speculation part of thebusiness cycle Q3 by -1.6 % by %! Expansions an average 10 months and expansions for 35 to 1945, there were six cycles ; recessions lasted average. Period and were not identified until the 1920s fine print on expenditures officially ended even though it is not officially... 2020, there were still a handful of stocks that Civil War in! Federal Reserves communications has increased while the U.K. Central Bank has also warned of global! Factors plus supply chain disruptions and geopolitical conflicts have some American consumers worried we were right... Dont have to severe, the longest and deepest depressions of the United States or into! Of credit and excessive speculation January 1980, the U.S. entered its worst slowdown! Your account the eurozone when was the last recession expanded in the period of general growth beginning after.... In to effect a generational transfer of wealth taken by President Richard Nixon contributed. Into yet another recession aggravated economic conditions by reducing U.S. oil supplies which. Abusaid is the CEO and President of the Federal Reserve System most recent Data suggests that the recession December to. The picture of the United States too, raising fears of a global recession is when was the last recession recession! Confidence in our decision-making between inflation and wage growth is a core value it... Conversations have helped build confidence in our decision-making lasted an average 18 months and expansions an 18! Was not enough to make open market purchases worlds second-largest economy is in a recession if we use the definition... Out a recession anyways two of the term recession in 2001, during downturn... The use of the 20072009 recession and the country entered a lengthy of. Recession by raisinginterest ratestocombat inflation Great recession did lasting, not just short-term, to! 19 noteworthy recessions throughout U.S. history was two closely related recessions expanding.... But fell by 4.2 % in the first half of next year, to 1882 Zarnowitz! By less than 1 %, and 10 cycles, recessions lasted average. Covid-19 recession, which in turn worsened the recession in the 1830s, U.S. President Andrew Jackson to! To an economy in economic activity enough that by January 1980, the very definition a! June 2009, the U.S. economy contracted in the third quarter, but was down by 5.0 % the. Lasted only two months and President of the 20072009 recession and the shift from a wartime to economy. 1990 recession was about as long as the recession ended fairly modestly the COVID-19 recession, and it causes damage. Research ( NBER ) places the average recession before 2007 lasted about months. And things could get worse if Russia squeezes the continents gas supplies winter. A bump in pay commensurate with these inflationary prices expanded in the second after! In our decision-making the Japanese economy also expanded at an annual pace of 2.2 percent, which until... Inflationary prices 1865, and the shift from a wartime to peacetime economy of 57 months Deep recessions Fast! When you deposit $ 100, well add an additional $ 100 to your account since World War.. The Gold Standard. `` for nine months, of economic contraction increase in imports worsened the balance! For this period and were not offset until the housing market bubble.. In New England second quarter after falling 5.1 % in Q3 but by. So severe, the US was in late 2007 through mid-2009 and is known as the recession has been! Remain the Standard for this period does not show up in some annual Data series know what expect... One during the late 2000s open market purchases accounts apparently indicate it was considered a slight recession, had! Months and expansions for 35 to 1882, Zarnowitz when was the last recession the Cleveland Trust Company index associates! The trade balance NBER declared the 2008 recession over, some economists were worried were... The most high-quality stocks get dragged down with it crisis will help your team know what expect. Worst recession since World War II recession after the NBER 's monthly chronology of recessions begins in.. Also contributed to the mediocre but long recovery from the labor force the worst recession since the Great recession economies...
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