US COVID-19 Recession Was the Shortest Ever, Ending in Just 2 Months

NBER: "April Last Year Was the Economic Bottom... Rebound Started in May"

[Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] It has been confirmed that the recession period in the U.S. due to COVID-19 lasted only two months.

According to Bloomberg News on the 19th (local time), the National Bureau of Economic Research (NBER), which officially determines whether the U.S. economy is in recession, announced that the U.S. recession after COVID-19 lasted from March to April last year, only two months, marking the shortest recession on record. The previous shortest recession occurred in 1980, lasting six months. Typically, a recession is defined as two consecutive quarters of decline in Gross Domestic Product (GDP), but the NBER determines recession status by examining a sharp decline in economic activity.

In its report, the NBER clearly showed that all indicators related to employment and productivity bottomed out in April 2020 and analyzed that the economic rebound began in May last year.

The COVID-19 recession is the third recession the U.S. economy has experienced since 2000. The previous two recessions occurred immediately after the dot-com bubble burst in 2001 and after the housing market bubble burst from 2007 to 2009. The 2001 recession lasted eight months, and the 2007-2009 recession lasted one year and six months. This COVID-19 recession appeared after a remarkably long economic expansion phase of 10 years and 8 months following the end of the 2009 recession. It was the longest economic expansion since 1854 before the recession occurred.

The NBER analyzed that the U.S. economy quickly emerged from the COVID-19 recession due to the effective implementation of aggressive fiscal and monetary stimulus policies by the government and the Federal Reserve (Fed), the central bank. The rapid distribution of vaccines also contributed to the swift recovery of the U.S. economy from the recession. This year, the U.S. economy is expected to record the highest economic growth rate in about 30 years.

Professor Jeffrey Frankel of Harvard University said, "Aggressive fiscal and monetary stimulus policies led the economic rebound," adding, "If the timing and scale are appropriate, this will be recorded as the most appropriate example demonstrating how effective active macroeconomic management policies can be."

Michael Feroli, Chief Economist at JP Morgan Chase, said, "There are similarities to the 1980 recession in that total demand sharply declined over a short period and then quickly recovered as the factors suppressing demand disappeared," and added, "This will be recorded as a victory for economic policymakers."

However, the NBER analyzed that the labor market recovery is progressing slowly. Although the labor market also bottomed out in April, it showed strong recovery for several months afterward but then the recovery pace significantly slowed down.

Although the recession lasted only two months, 2.2 million jobs were lost during the COVID-19 recession. The NBER analyzed that as of June this year, the number of jobs is 7 million fewer than the pre-COVID-19 peak. This means that only about two-thirds of the jobs lost after COVID-19 have been recovered.

Jerome Powell, Fed Chair [Photo by AP Yonhap News]

Fed Chair Jerome Powell has also expressed the view that the current unemployment rate shows an incomplete recovery of the labor market.

In February last year, just before the World Health Organization (WHO) declared the COVID-19 pandemic, the U.S. unemployment rate was 3.5%, the lowest in 50 years. The Fed expects that the unemployment rate will not return to that level until 2023.

The NBER also pointed out that the risk of a new recession is increasing as the COVID-19 vaccination rate no longer rises.

During the 1980 recession, the U.S. economy ended a short six-month recession but fell into another recession a year later. The 1981 recession lasted one year and four months. At that time, the Fed, led by Chairman Paul Volcker, sharply raised the benchmark interest rate to control inflation.

This content was produced with the assistance of AI translation services.