It's official: U.S. economy entered recession in
February
Send a link to a friend
[June 09, 2020] By
Howard Schneider
(Reuters) - The U.S. economy ended its
longest expansion in history in February and entered recession as a
result of the coronavirus pandemic, the private economics research group
that acts as the arbiter for determining U.S. business cycles said on
Monday.
The Business Cycle Dating Committee of the National Bureau of Economic
Research said in a statement its members "concluded that 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 designation was expected, but notable for its speed, coming a mere
four months after the recession began. The committee has typically
waited longer before making a recession call in order to be sure. When
the economy started declining in late 2007, for example, the group did
not pinpoint the start of the recession until a year later.
![](http://archives.lincolndailynews.com/2020/Jun/09/images/ads/current/chicagost_sda_SFARM_2020.png)
Graphic: The COVID-19 Recession -
https://fingfx.thomsonreuters.com/
gfx/mkt/ygdvzqarmpw/Pasted%20image%201591635388754.png
But the depth and speed of this collapse left little doubt.
"In deciding whether to identify a recession, the committee weighs the
depth of the contraction, its duration, and whether economic activity
declined broadly across the economy. ... The committee recognizes that
the pandemic and the public health response have resulted in a downturn
with different characteristics and dynamics than prior recessions," the
committee said in a statement.
U.S. gross domestic product fell at a 4.8% annualized rate in the first
three months of the year. The outcome for the April to June period is
expected to show an even worse annualized decline of perhaps 20% or
more. The unemployment rate rose from a record low of 3.5% in February,
hitting 14.7% in April and 13.3% last month.
But growth may well recover from there, possibly making the current
downturn not only among the sharpest but also among the shortest on
record.
[to top of second column] |
![](../images/060920pics/busine47.jpg)
A pedestrian walks on an empty street amid the coronavirus disease
(COVID-19) outbreak, in Boston, Massachusetts, U.S., May 12, 2020.
REUTERS/Brian Snyder/File Photo
![](http://archives.lincolndailynews.com/2020/Jun/09/images/ads/current/heartland_discover_lda_April_2020.png)
Since World War Two recessions have lasted from six to 18 months, nothing close
to the 43-month downturn of the Great Depression that began in 1929.
Though the data that began to accumulate in March rival some of the statistics
from the Depression era, economists expect growth to resume this summer and
likely continue unless the virus resurges.
“It could very well be that this is the beginning of the trough," Jack Kleinhenz,
chief economist for the National Retail Federation, said in an economic outlook
seminar organized by the National Association for Business Economics. But "there
are so many moving parts," he said. "If we have a reoccurrence of the pandemic
and it comes on stronger, there is the potential of another dip" in economic
growth.
The speed of the recovery will be important in determining whether the current
recession has the same lasting impact as past downturns. The 2007 to 2009
recession, for example, was associated with a permanent loss of several hundred
thousand blue-collar manufacturing jobs, sustained long-term unemployment, and
years of weak wage growth for middle- and lower-income families.
![](http://archives.lincolndailynews.com/2020/Jun/09/images/ads/current/humanesociety_sda022411.png)
The U.S. Federal Reserve meets this week, and officials will issue new economic
projections that show how quick a recovery they expect.
(Reporting by Dan Burns; Additional reporting by Howard Schneider; Editing by
Leslie AdlerEditing by Franklin Paul and Steve Orlofsky)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |