This paper shows theoretically and empirically that economies can recover from crises while deleveraging. The key insight is that it is the flow of credit and not the level of credit that is tightly correlated with consumption and investment over the business cycle. We introduce the concept of the credit impulse, the change in the flow of credit, which is correlated with economic growth. Recoveries therefore coincide with reductions in the speed of deleveraging. This insight also explains apparent “credit-less” recoveries, which are the coincidence of deleveraging and economic growth.