Covid recession only lasted two months, the shortest in U.S. history

The Covid-19 recession is on the books as one of the deepest – but also the shortest – in U.S. history, the official business cycles documenter said on Monday.

According to the National Bureau of Economic Research, the contraction lasted only two months, from February 2020 to the following April.

Although the drop caused a dizzying 31.4% drop in GDP in the second quarter of the pandemic year, it also saw a massive setback in the following period, with unprecedented policy stimulus increasing the output of 33.4%.

“By determining that a trough occurred in April 2020, the committee did not conclude that the economy has returned to normal capabilities,” the NBER said in a press release. “The committee decided that any future downturn in the economy would be another recession and not a continuation of the recession associated with the February 2020 peak. The basis for that decision was the duration and strength of the recovery to date.”

The pandemic recession was unique in many ways, including the speed with which the contraction occurred and the ferocity of the recovery.

Classically, a recession is defined as two consecutive quarters of negative GDP growth, which this recession encountered after the first quarter of 2020 fell by 5%. But the NBER noted that normally, a recession lasts “more than a few months.”

“However, in deciding whether to identify a recession, the committee assesses the depth of the contraction, its duration and whether economic activity has declined overall in the economy as a whole (the spread of the recession)”, indicates the press release.

“The recent downturn had different characteristics and dynamics from previous recessions. Nonetheless, the committee concluded that the unprecedented scale of the decline in employment and output, and its wide reach throughout the economy, justified the designation of this episode as a recession, even though the slowdown was shorter than the previous contractions, ”the statement added.

In any event, the Covid recession is by far the shortest in history, with the decline from January to July 1980 being the next six months. The longest lasted from October 1873 to March 1879, that is to say a duration of 65 months.

The decision in this case to end the recession over a year ago, however, came as no surprise. Many economists had long pronounced the decline, with annualized GDP rising 4.3% and 6.4% in the last two quarters and on track to jump 7.5% in the second quarter of 2021, according to the Reserve Federal of Atlanta.

The NBER said it had also based its decision on trends in GDP and gross domestic income. Most economic indicators have returned to pre-Covid levels, although employment, arguably the most important, has lagged. There are still 7.1 million fewer Americans at work now than they were in February 2020, before the pandemic began.