Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

US recession began in February amid coronavirus pandemic, ending longest expansion in history

National Bureau of Economic Research, which made the official designation, cites ‘unprecedented magnitude’ and ‘broad reach’ of decline. World Bank projects that international economic activity will shrink by 5.2 per cent this year, the deepest global downturn since end of World War II

The US economy entered a recession in February as the coronavirus pandemic struck the nation, a group of economists declared on Monday, ending the longest expansion on record.

The economists said that employment, income and spending peaked in February and then fell sharply afterward as the viral outbreak shut down businesses across the country, marking the start of the downturn after nearly 11 full years of economic growth.

A committee within the National Bureau of Economic Research, a trade group, determines when recessions begin and end. It broadly defines a recession as “a decline in economic activity that lasts more than a few months”.

For that reason, the NBER typically waits longer before making a determination that the economy is in a downturn.

During the previous recession, the committee did not declare that the economy was in recession until December 2008, a year after it had actually begun. But in this case, the NBER said the collapse in employment and incomes was so steep that it could much more quickly make a determination.

“The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions,” the NBER panel said.

The way the NBER defines recessions, they begin in the same month that the previous expansion ends. Because the economy peaked in February, that is the month when the recession officially began, rather than in March, when unemployment began to rise.

Financial markets had little reaction Monday to the NBER’s declaration.



February is when the stock market hit its own record high before stumbling into a severe downturn from which it has mostly recovered, thanks to extraordinary stimulus and support measures from the Federal Reserve and Congress as well as expectations that the worst of the economic pain may have passed.

The unemployment rate is officially 13.3 per cent, down from 14.7 per cent in April. Both figures are higher than in any other downturn since World War II. A broader measure of underemployment that includes those who have given up looking and those who have been reduced to part-time status is 21.2 per cent.

On Friday, the government said that employers added 2.5 million jobs in May, an unexpected gain that suggested job losses may have bottomed out. A recession ends when employment and output start to pick up again, not when they reach their pre-recession levels. So it is possible that the recession could technically end soon.

That would make the current recession the shortest and deepest on record. It is expected to be followed by an extended recovery before the economy manages to regain its pre-pandemic levels of production and employment. Some economists say it could take two years or more, with the unemployment rate likely still 10 per cent or higher at the end of this year.

“The most important thing to focus on is the strength of the recovery, and that’s where the greatest uncertainty lies right now,” said Ernie Tedeschi, policy economist at investment bank Evercore ISI.

It is unclear, Tedeschi noted, whether the virus is under control, whether there will be a second wave or whether or when a vaccine will be developed.

On Monday, the World Bank said the world was facing a health and economic crisis that has spread with astonishing speed and will produce the largest shock the global economy has witnessed in seven decades. It expects millions of people to be pushed into extreme poverty.

In its updated global outlook, the World Bank projected that international economic activity will shrink by 5.2 per cent this year, the deepest recession since a contraction in 1945-46 at the end of World War II.

The 5.2 per cent downturn would be the fourth-worst global downturn over the past 150 years, exceeded only by the Great Depression of the 1930s and the periods immediately after World War I and World War II.

In the US, states have begun reopening their economies, thereby allowing businesses to recall some employees to work. But economic activity is returning only very gradually.

A full recovery will not occur until Americans are willing to resume their previous habits of shopping, eating out, and travelling. That might not happen until a vaccine is developed or testing is more widely available.

Diane Swonk, chief economist at Grant Thornton, an accounting firm, said the NBER committee might end up declaring this recession to have already ended in May based on the fact that hiring rebounded that month.

“We could have the shortest recession in history – it seems ridiculous, but we could,” Swonk said. Still, it will take much longer for the economy to rebound, she said.

“This bottom is going to be uniquely deep, and we don’t know how fast we will get out of the bottom,” she said.




AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
×