The Recession Is Here…

It’s official: A recession began in March after the end of the longest economic expansion in US history a month earlier.  The National Bureau of Economic Research (NBER) on Monday said a 128-month expansion — the longest dating to 1854 — came to a halt in February. The NBER is a private research group led by US economists. According to MarketWatch, the NBER has the last word on when business cycles begin and end.

“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 NBER’s Business Cycle Dating Committee said in a statement. “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.”

Okay, now that we know when the recession started; the question is, when will it end?

US GDP fell 5% in the first quarter of 2020 and some analysts predict a 40% decline for Q2 GDP, which would be the worst economic downturn since The Great Depression. The recession brings to an end the longest expansion in US history, which the NBER dated as lasting 128 months, or nearly 11 years. That growth seemed poised to continue until the declaration of the coronavirus as a pandemic, a move that triggered 95% of the US economy being put into shutdown and sent the unemployment rate, which had been at a 50-year low, soaring to 14.7%, its worst in post-World War II history.

However, most economists think contraction will end in the second quarter, putting an end to the recession as well. Goldman Sachs' Chief Economist Jan Hatzius said that while this is “almost certainly the deepest recession since” the war, “it is almost certainly also the shortest recession.”

In fact, Hatzius pointed out, no recession has lasted less than six months, dating back to the mid-1800s.