U.S. Economy Officially Enters Recession as of February
In February 2020, the United States economy entered its first recession in 11 years as a result of the widespread business shutdown during the coronavirus pandemic. According to a report issued this week by the National Bureau of Economic Research, the recession ended a 128-month long economic expansion, the longest expansion on record, that began in June 2009.
“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 group said. “Nonetheless, it 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.”
Typically, a recession involves an economic decline lasting more than a few months, but the group weighs the depth of the decline over time and how broadly it affects the country to determine a recession.
A recession starts when economic activity peaks and ends when the economy reaches its trough, but peaks can occur in different quarters. The committee found that on a monthly basis, payroll employment reached a “clear peak” in February. On a quarterly scale, however, the economy peaked during the last 3 months of 2019.
The Federal Reserve has pumped trillions of dollars into the economy during the pandemic, which played a role in the unemployment rates of April and May. Still, the Bureau of Labor Statistics stated that in May, the unemployment rate reached 13.3 percent. Economists have warned that if extended federal support runs out, any economic recovery may be delayed.