The COVID-19 recession in the U.S. is officially over, according to the National Bureau of Economic Research on Monday. It is also the shortest but one of the sharpest in the country’s history.
According to the official documenter, the economic contraction lasted just two months, between February 2020 and the following April, CNBC reports.
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The recession saw a whopping 31.4% GDP drop in the second quarter of 2020, with also an enormous recovery the following period, “with previously unheard of policy stimulus boosting output by 33.4%.”
The NBER stated: “In determining that a trough occurred in April 2020, the committee did not conclude that the economy has returned to operating at normal capacity.”
“The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession associated with the February 2020 peak. The basis for this decision was the length and strength of the recovery to date.”
The recession caused by COVID-19 was a one-off in U.S. history, due to how fast the economy shrank and how aggressively it bounced back.
Pandemic Halted 12-Year Growth Period
NBER’s Business Cycle Dating Committee asserts that the COVID-19 recession halted the longest period of economic growth on record, which started in June 2009 and lasted 128 months.
The brevity of the recession could justify the “cash-first” approach that financial regulators have implemented, in the shape of constant household support payments, stronger unemployment benefits, and the opening of credit for small companies.
Ivan Kaufman, president, and CEO of Arbor Realty Trust (ABR), a real estate company, had told CNN in late June, anticipating the NBER’s announcement: “We’re not in a recession anymore. Things are incredibly strong and it's almost a euphoria.”
As pointed to by the Atlanta Federal Reserve Several, experts had already been talking about the end of the recession for a long while, as annualized GDP rose 4.3% and 6.4% in the past two quarters. It was also very much on course to climb 7.5% in the second quarter this year.
Further, investors do not seem like acting during typical recession times, as the major fear at present is whether the economy will overheat, prompting the Federal Reserve to taper bond purchases and increase interest rates earlier than projected.
While most economic indicators have bounced back to pre-pandemic levels, employment is still falling short by 7.1 million citizens at work, when compared to February last year before the start of the pandemic.