A Recession Like No Other

Corona Recession
Choosing Not to Spend
The Wealthy Assume the Fetal Position
Inevitable and Unacceptable
Puerto Rico and Dust Bowls

We just spent the better part of a decade wondering when the next recession would strike. The last two months we stopped wondering. It’s here and a grand council of esteemed economists has confirmed it.

On June 8, the Business Cycle Dating Committee of the National Bureau of Economic Research found monthly economic activity had peaked in February 2020. On a quarterly basis, the peak was in Q4 2019, but in either case, a recession is now underway.

It’s important to recognize how they define “recession.”

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.

If the trough isn’t here yet, when will it arrive? We don’t know. The NBER committee identifies these in hindsight. If all goes well, they may look back and say March or April was the bottom, making this one of the shortest recessions ever. But it will also be the strangest recession ever, because even if we are “recovering” we will still be further away from the previous peak than ever before, with unemployment well above 10 million.

NBER also said this time is different:

The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions.

Considering exactly how this recession is different gives us some insight into how long it may last.