The pandemic recession is officially over.
In fact, it’s been over for over a year.
The National Bureau of Economic Research, the semi-official arbiter of US business cycles, announced on Monday that the recession would end in April 2020 after just two months. That makes it by far the shortest contraction in existence – so short that in June 2020, when the Office officially determined that a recession had begun, it had been over for two months. (The previously shortest recession since records began in 1980 lasted six months.)
The 2020 recession was short but unusually severe. Employers cut 22 million jobs in March and April, and the unemployment rate hit 14.8 percent, its lowest level since the Great Depression. The gross domestic product fell by more than 10 percent.
The end of the recession doesn’t mean the economy has recovered. The United States has nearly seven million fewer jobs than it did before the pandemic, and while gross domestic product has most likely returned to pre-pandemic levels, thousands of businesses have failed and millions of people are still struggling to get back on their feet .
For economists, however, recessions are not just times of financial hardship. They are times of economic decline as measured by employment, income, production and other indicators. Once growth resumes, no matter how deep the hole is, the recession is over. For example, the recession that accompanied the 2008 financial crisis ended in June 2009 – four months before the unemployment rate peaked and years before many Americans saw a major boom.
The unusual nature of the pandemic-induced economic collapse challenged the traditional concept of a “recession”. The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts for more than a few months”. Literally, the recent downturn fails this test – the recession only lasted a few weeks. But the office’s business cycle dating committee decided the contraction should still count.
“The committee concluded that the unprecedented scale of the decline in employment and output, and its broad reach across the economy, justified classifying this episode as a recession, even though the downturn was shorter than previous contractions,” the committee said in a statement.