After a historic run of 128 consecutive months of economic growth since the 2008 recession, the United States officially entered a recession in February, the National Bureau of Economic Research (NBER), which determines recessions based on economic data, said Monday.
The recession brings an end to the longest economic expansion in post-World War II history which saw unemployment fall to historic levels. Then, as the coronavirus swept through the country, forcing states to shutter businesses, economic activity plunged.
"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.”
The economy saw its peak during the final quarter of 2019. According to NBER, as the coronavirus pandemic began to spread through the U.S., gross domestic production dropped by 5 percent in the first quarter of 2020 with the second quarter potentially seeing a 54 percent drop in GDP. That was enough to wipe out all the gains made in January and February.
"March represented a huge contraction, and that contraction was significant enough that it offset the growth in January and February," Bankrate.com chief financial analyst Greg McBride told NBC News. "That really underscores the significant and sudden stop in the economy, because the lockdowns didn't even kick in on March 1. So, in reality, it was the last two weeks of the quarter."
While recessions are generally determine by two consecutive quarters of negative growth, a spokesperson for NBER said the staggering drop in production and historic increases in unemployment, prompted them to issue the recession forecast early.
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