If there was any doubt that the U.S. is in a recession, the nation’s scorekeepers made it official on Monday (June 8).
“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,” said the National Bureau of Economic Research (NBER), the Cambridge-based 100-year old nonpartisan nonprofit whose mission is to conduct economic research.
NBER defines a recession as 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.”
The committee concluded a peak in the nation’s monthly economic activity occurred in February, which signifies the end of the expansion that began in June 2009 and the start of a recession.
“The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854,” NBER said. “The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.”
While NBER reported February as the month the economy peaked and the recession began, the quarterly peak came at the end of last year, they wrote. The economy slowed so sharply in March that the gross domestic product (GDP) and employment in the first quarter of 2020 were “significantly below” the levels of the last quarter of 2019.
At the same time, NBER said the recession could be quick. The U.S. added 2.5 million jobs last month after losing more than 22 million in March and April.
“The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions,” NBER said. “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.”