Pandemic Recession Officially Lasted Only Two Months
The pandemic recession is officially over.
In fact, it’s been over for over a year.
The National Bureau of Economic Research, the semi-official arbiter of U.S. economic cycles, said on Monday that the recession ended in April 2020, after just two months. That makes it by far the shortest contraction on record – so short that in June 2020, when the bureau officially determined that a recession had started, it had been over two months ago. (The previous shortest recession on record, in 1980, lasted six months.)
But while the 2020 recession was short, it was exceptionally severe. Employers cut 22 million jobs in March and April and the unemployment rate hit 14.8%, the worst level since the Great Depression. The gross domestic product fell by more than 10 percent.
The end of the recession does not mean the economy has recovered. The United States has nearly seven million fewer jobs than before the pandemic, and although gross domestic product has most likely returned to its pre-pandemic level, thousands of businesses have gone bankrupt and millions of people still struggle to get back on their feet.
For economists, however, recessions are not just times of financial hardship. These are periods of economic contraction, measured by employment, income, production and other indicators. Once growth resumes, the recession is over, no matter how deep a hole is. The recession that accompanied the 2008 financial crisis, for example, ended in June 2009 – four months before the unemployment rate peaked and years before many Americans began to rebound significantly. .
The unusual nature of the pandemic-induced economic collapse has challenged the traditional concept of “recession”. The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that spans the entire economy and lasts more than a few months.” Taken at face value, the latest downturn fails this test: the recession only lasted a few weeks. But the office’s Business Cycle Dating Committee decided that the contraction should count nonetheless.
“The committee concluded that the unprecedented scale of the decline in employment and output, and its wide reach across the economy, warranted the designation of this episode as a recession, even though the downturn was shorter than previous contractions, ”the committee said in a statement.
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