Last updated on June 15, 2020
Oh so brand-conscious Trump now has his very own recession. No, it’s not Obama’s. Trump has ended 128 months of economic growth, before COVID-19 hit. Remember the stock market is not the economy.
The U.S. is in a recession, the National Bureau of Economic Research says, bringing an end to a historic 128 months of economic growth.
Cambridge, June 8, 2020 – The Business Cycle Dating Committee of the National Bureau of Economic Research maintains a chronology of the peaks and troughs of U.S. business cycles. The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.
The committee also determined that a peak in quarterly economic activity occurred in 2019Q4. Note that the monthly peak (February 2020) occurred in a different quarter (2020Q1) than the quarterly peak. The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak. Further comments on the difference between the quarterly and monthly dates are provided below.
A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide indicators of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.
….The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. 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.
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending.
The National Bureau of Economic Research or NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” With projections and economic data now showing a downturn, the U.S. economy is about to enter a “Greater Recession” than what was experienced during 2008 and 2009.
Coronavirus and response or non-response
While President Trump didn’t create the coronavirus, his Administration’s slow response has probably led to a greater impact on the economy than if policies had been put in place and medical equipment had been ordered earlier. Other countries that implemented more readily available testing have avoided the severe restrictions and number of deaths that have occurred in the U.S.
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