Coronavirus driven recession ended in April 2020, lasted just two months

The coronavirus-caused recession in the United States lasted only two months, reaching a low point in April 2020 after a significant decrease in economic activity in March 2020.

The National Bureau of Economic Research’s (NBER) statement on Monday also marks the formal start of the economic recovery from the coronavirus pandemic. The recession ended the country's longest known economic boom, which began in June 2009 and lasted 128 months, according to the bureau's Business Cycle Dating Committee, the acknowledged arbiter of recession dates in the United States, WSJ reported.

The committee utilizes several measures to identify the peaks and troughs that characterize economic contractions, defining a "recession" as a major drop in economic activity that lasts more than a few months and is widespread across the economy.

Though the decline saw a startling 31.4 % GDP loss in the second quarter of the pandemic-scarred year, it also witnessed a huge rebound the following quarter, with previously unheard-of policy stimulus increasing output by 33.4 %.

“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 NBER said in a statement.

“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.”

Around 22 million jobs were lost from company payrolls in March and April of 2020, sparking fears of new depression and prompting Congress and the White House to approve the first of several huge relief packages to keep businesses and people afloat.

“The recent downturn had different characteristics and dynamics than prior recessions. Nonetheless, the committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions,” the NBER said.

According to the Commerce Department, the economy dropped 3.5 % year on year in 2020, the biggest drop since just after World War II. The economy declined 2.5 % from the fourth quarter of 2019 to the same quarter of 2020.

“Employment reached a clear trough in April before rebounding strongly the next few months and then settling into a more gradual rise,” the statement added.

Though fears of a fresh slowdown have grown as coronavirus infections have risen again and a nationwide vaccination effort has stagnated with less than 60% of the eligible population vaccinated, Reuters reported.

Picture Credits: Risk Magazine