The United States officially emerged from a recession in April 2020, concluding an economic contraction due to a pandemic that lasted two months, making it the shortest on record.
The National Bureau of Economic Research’s announcement Monday also marks April as the official start of economic recovery from the initial shock of the coronavirus pandemic last spring, which sparked numerous business and business closures. schools, a sharp drop in demand for services and record employment. losses.
The recession ended the country’s longest-recorded economic expansion, which began in June 2009 and lasted 128 months, according to the office’s Business Cycle Dating Committee, the recognized arbiter of recession dates in the United States.
The committee uses a variety of indicators to identify the peaks and valleys that frame economic contractions, defining “recession” as a significant drop in economic activity spread throughout the economy that last more than a few months. The group typically waits until a business cycle is well underway before declaring it has started – it took over a year to declare the 2007-09 recession to be over. But he broke with past practice last summer when he announced that a recession had started a few months earlier.
The economy decreased at an annual rate of 5% in the first quarter of 2020 and at a rate of 31.4% in the second quarter, corrected for inflation, estimated the Commerce Department. Then, output and employment rebounded strongly in the second half of the year, with gross domestic product increasing at an annual rate of 33.4% in the third quarter and at a rate of 4% in the fourth quarter.
Measured year over year, the economy contracted 3.5% in 2020, the biggest drop since just after World War II, the Commerce Department reported. Measured from the fourth quarter of 2019 to the same quarter of 2020, the economy shrank 2.5%.
Fueled by Covid-19 vaccinations, economic reopening and fiscal stimulus measures, the economy increased at a seasonally adjusted annual rate of 6.4% in the first quarter of this year. Economists believe it grew at an even faster rate in the second quarter: 9.1% according to a Wall Street Journal survey. Economists also believe growth peaked in the spring, but strong expansion is likely to continue next year. Second-quarter GDP figures are expected to be released by the Commerce Department on Thursday, July 29.
While past recessions have affected the economy more evenly, the most recent slowdown and recovery may be characterized by uneven results, said Diane Swonk, chief economist at accounting and consulting firm Grant Thornton . While some industries have quickly rebounded to pre-pandemic activity and employment levels, others are still adjusting to an economic change that has affected demand for services, especially in areas such as travel , entertainment, bars and restaurants.
Households increased their spending on these services in May, helping to position the economic recovery for a strong summer.
“This is such a unique recession that it’s hard to fit it into the traditional boxes of what we think of: recovery, economic activity dip, then rebound,” said Ms Swonk, speaking before the NBER announcement.
The resumption of the Covid
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