The Pandemic Recession in the United States was the shortest ever.
While the COVID-19 epidemic is far from ended, as mounting case numbers in numerous countries regrettably demonstrate, the U.S. economy is officially in recession as a result of it. As the official historian of US business cycles declared on Monday, this has been the case for quite some time. According to an official announcement by the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee, the US economy bottomed out in April 2020, just two months after its last top in February 2020.
A recession begins in the first month after a peak in economic activity and concludes in the month following the subsequent trough, according to the NBER’s rules for charting economic cycles. In this situation, that means the COVID-19 recession was the shortest on record, lasting barely two months.
While one of three factors for determining a recession – depth, diffusion, and duration – the NBER notes that “extreme conditions shown by one criterion may partially outweigh weaker indicators from another.” As the committee correctly predicted in June 2020 when it announced the recession, “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 Business Cycle Dating Committee, a group of ten renowned economists, is tasked with pinpointing the exact date of a trough/peak in economic activity. This involves weighing the behavior of various indicators (such as real GDP and total payroll employment) to pinpoint turning points in economic activity as precisely as possible. The end of a recession should not be confused with a return to pre-crisis economic activity, as the NBER points out. “In the early phases of an expansion, economic activity is often below normal, and it occasionally remains so well into the expansion.”