Key Highlights
- National Bureau of Economic Research (NBER) said economy now in “official” pandemic-driven recession
- NBER noted recession to be short-lived
The standard definition of recession is “a decline in economic activity that lasts for more than a few months.” Because of the severity of the current US economic downturn, the committee of the National Bureau of Economic Research (NEBR), the bureau’s Business Cycle Dating Committee, declared the US economy to be in recession at the beginning of the second week in June.
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The committee pointed specifically to the country’s double-digit unemployment and downward spiraling economic output in its official call of recession. The bureau’s committee said that the economic expansion of a record 128 months peaked in February. After that peak, the economy’s slide into the current pandemic-driven recession began.
Despite the economy adding 2.5M jobs in May, the bureau’s focus remained on the “unprecedented magnitude of the decline in employment (22M jobs lost in March and April and a total of 42M in May) and production, and its broad reach across the entire economy.”
Simultaneous with its recessionary call, the bureau’s forecasters are forecasting economic output to begin a growth cycle in the third quarter of this year. Officially, recessions “end” when the economy stops bleeding regardless of how long it takes for the economy to make a full recovery.
This pandemic-driven recession began so sharply in March that it completely erased the gains of January and February and turned the economic output negative in Q1 2020. This means that the bureau’s committee calls February 2020 as the month of the economy’s peak but that the quarterly economic peak came at the end of Q4 in 2019.
Incidentally, as we wrote here two weeks ago, this pandemic-driven recession is the second recession to be experienced by younger Millennials and the third for older Millennials.
Thanks to National Public Radio.
Also read: Podcast: Todays Real Estate News Headlines | Home Value Loss Looming? | Tim and Julie Harris, Recession This Year in US Seen as Coin Toss, Economy Shrinks -4.8% in Q1 – Likely Just “Tip of the Iceberg”
