Economic research

National Bureau of Economic Research: US Covid-19 Recession Officially Ended April 2020

In case anyone was starting to get worried, the US economy officially emerged from the worst recession in history in April 2020, marking the shortest contraction on record.

From February 2020, the US economy collapsed in the worst period of contraction since World War II, which saw GDP levels plunge 31.4% in the second quarter. The Covid-19 recession marked the end of the longest economic expansion on record in the United States, which began in June 2009 and lasted 128 months. However, according to the National Bureau of Economic Research, the Covid-19 recession only lasted two months, with the bottom of the business cycle occurring in April 2020.

Generally, a recession is defined as a negative expansion of GDP for a period of two consecutive quarters; however, as the NBER notes, the Covid-19 recession met the criteria when GDP growth fell 5% in the first quarter. “The recent recession had different characteristics and dynamics from previous recessions. Nonetheless, the committee concluded that the unprecedented magnitude of the drop in employment and output, and its broad reach across the economy, warranted designation of this episode as a recession, even though the slowdown was shorter than previous contractions.

The NBER added that its decision is based on trends in GDP and income indicators, many of which are back to or near pre-pandemic levels. Jobs, on the other hand, have yet to make a strong comeback, as more than 14 million Americans are still receiving some form of government unemployment benefits.

Nevertheless, the question of money remains: if the recession officially ended more than 15 months ago, why do Fed Chairman Jerome Powell and his comrades on the “Transitory” team continue to maintain the ticket board? Ask a friend…

The information for this briefing was found via the NBER. The author has no security or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author holds no license.