US recession began in February

• 2020-06-10
• Traiding Idea

US recession began in February

The longest economic development in US history has officially over. The National Bureau of Economic Research said Monday that the recession began in February.

The economy collapsed so quickly that NBER wasted no time in announcing the recession, a clear contradiction to previous recessions when the body took upwards of a year to declare what most people already knew.

Social distancing requirements imposed to combat the pandemic have shattered swaths of the US economy, from cruise ships and airlines to restaurants and Broadway shows.

"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," NBER said.

Over 42.6 million Americans have filed for unemployment benefits. Big companies such as JCPenney, J.Crew and Hertz have filed for bankruptcy. And economists predict that GDP imploded at an annual rate of 40 % during the second quarter.

The pandemic was the end of a mediocre but long recovery from the Great Depression. In July 2019, this expansion officially became the longest period of uninterrupted growth in US history, dating back to 1854.

It spanned 128 months and easily broke the previous 120-month record between March 1991 and March 2001 during the Datcom boom.

Economists typically define the recession as consecutive quarters of negative growth.

The United States has already endured one-quarter of a shrinking economy, with the gross domestic product ( GDP ) fell by 5% during the first quarter.

NBER has decided not to wait for the second quarter of the contracting economy, although this is expected to happen during the second quarter.

The body also declared that while the economy peaked on a monthly basis in February, The peak of the quarter occurred in the fourth quarter. That inequality "reflects the unusual nature of this recession," NBER said.

"The economy contracted so sharply in March," NBER said, that by the first quarter GDP and employment were significantly lower than in the fourth quarter of 2019.