Economists Say Pandemic Recession Has Been Over for More Than a Year

By:
Chris Gaetano
Published Date:
Jul 20, 2021
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The National Bureau of Economic Research (NBER) said that, on a technical level, the recession brought on by the pandemic lasted only two months, officially ending in April 2020, despite the long-lasting economic damages that came in its wake. That makes it the shortest U.S. recession on record.

There is no specific technical definition of a recession, but it is generally understood to be an extended period of economic decline. In the NBER’s convention for measuring the length of a recession, the first month of the recession is the month following the peak and the last month is the month of the trough. Because the most recent trough was in April 2020, the last month of the recession was April 2020, and May 2020 was the first month of the subsequent expansion.

This is not to say all is well, as just opening up any business publication will tell otherwise. By "expansion," The NBER just means a period of rising economic activity spread across the economy, normally visible in real gross domestic product, real income, employment, industrial production and wholesale-retail sales. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.

Usually, a recession is measured in months or even quarters. However, the extent of the damage led the NBER to dispense with its traditional time scale. The NBER concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions.

In a sense, one might compare a recession with having a serious illness for a period of time. While, with treatment, one might eventually be cured, the event has still left the body in a delicate state, meaning that, despite the disease no longer being there, it will still be a while before one might be considered healthy. This period of recovery could even be longer than the illness itself and require measures such as medication or physical therapy. In this same respect, while technically the recession might have been over more than a year ago, it will still take a while before the economy recovers from its effects. 

The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession associated with the February 2020 peak. The basis for this decision was the length and strength of the recovery to date.

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