KB Home’s construction of single-family homes is shown under construction in the Valley Center community, California, the United States, June 3, 2021.
Mike Blake | Reuters
The Covid-19 recession is on the books as one of the deepest – but also shortest – in US history, the official documentary of the economic cycles said on Monday.
According to the National Bureau of Economic Research, the decline lasted only two months, from February 2020 to the following April.
Though the decline in the second quarter of the pandemic-marked year saw a staggering 31.4% slump in GDP, there was also a massive setback in the period that followed, with previously unknown political stimuli boosting production by 33.4%.
“Finding a low point in April 2020, the committee did not conclude that the economy is back to normal,” the NBER said in a press release. “The committee decided that any future downturn in the economy would be a new recession, not a continuation of the recession related to the February 2020 peak. The basis for this decision was the duration and strength of the recovery so far. “
The pandemic recession was unique in many ways, not the least of which was how fast the contraction was and how severe the recovery was.
Conventionally, a recession is defined as two consecutive quarters of negative GDP growth that this recession hit after the first quarter of 2020 fell 5%. However, the NBER noted that a recession lasts “more than a few months” in normal times.
“In deciding whether to identify a recession, however, the committee is weighing the depth of the contraction, its duration, and whether activity across the economy (the spread of the downturn) has declined,” the press release said.
“The recent downturn has had different characteristics and dynamics than previous recessions. Nonetheless, the committee concluded that the unprecedented scale of the decline in employment and production and its broad reach across the economy justified the classification of this episode as a recession, even “although the downturn was shorter than previous contractions,” the statement added .
In any case, the Covid recession is by far the shortest in history, with the January to July 1980 pullback being the next in line at six months. The longest ever ran from October 1873 to March 1879, a duration of 65 months.
However, the decision in this case that the recession ended more than a year ago came as no surprise. Many economists had declared the decline long ago, with annualized GDP rising 4.3% and 6.4% in the past two quarters and rising 7.5% in the second quarter of 2021, according to the Atlanta Federal Reserve should.
The NBER said it also based its decision on trends in both GDP and gross domestic income. Most economic indicators have returned to pre-Covid levels, although employment, arguably the most important, has lagged. Today 7.1 million Americans are still working less than in February 2020 before the pandemic started.
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