U.S. Business Cycle Dating Committee announced on July 19, 2021, that the U.S. recession touched by coronavirus lasted for a mere two months. It came to an end in April 2020 after the economic activity experienced a sharp drop in March that year.
The committee consists of a group of macroeconomics who work at assigning start and end dates to U.S. Business cycles. They have stated that although the country is by no condition back to its actual operating capacity, however, the indicators of production and jobs suggest that April 2020 was surely the month of the trough. In addition, a rebound had begun already by May.
The resumption of growth was indeed pretty quick. But it was the never seen before the magnitude of decline that was the foundational reason for many to consider the situation to be an oncoming recession in the first place. In truth, for an economy to be considered under recession, there needs to be depth plus duration and diffusion.
Between March and April, a large number of jobs, approx. 22 Million disappeared in America. The despondent event warned of an oncoming era of depression. The situation forced Congress as well as the White House to send out several nationwide relief packages to help firms and households stay above board.
The recession’s cycle is of particular importance historically and is also relevant for researchers on the dynamics of business cycles. Further, the interconnectedness of the cycles with historic policy response plays out in reality. The pandemic, as per the announcement, is by far the shortest, with only two months, a third of the six-month downturn faced by the U.S. in 1980, and one-fourth of recession followed by the tech bubble collapse in the year 2021.
The small cycle of depression feeds the argument of several fiscal policymakers of a “cash-first” approach as the best way for fighting the pandemic. The experts were of the view that expanded unemployment benefits, liberal financing, and repeated household support payments. Moreover, the statement highlights the controversial debate of how fast the U.S. economy would be able to return to normal. If the output is calculated, the economy might already be at par; however, in respect of employment, it falls short, with the biggest hurdles being against less educated and lower wages workers.
Making things better, 2.8 Million people were given work in May 2020, and in the next year, around 15 Million jobs became available. Even then, 7 Million still remain lost, a worrisome amount still.