The US economic recession began before the pandemic: what will happen next

Record economic growth ended before the coronavirus pandemic was declared a national emergency, writes Fox News.

Photo: Shutterstock

The US economy may have entered a recession even before the federal government began issuing strict guidelines on coronavirus restrictions and social distance, which forced many businesses across the country to close.

According to a new report by the National Bureau of Economic Research (NBER), economic activity peaked in February, after which the 128-month record period of economic growth came to an end and the recession began.

Growth began in June 2009 and has been the longest since 1854.

Regarding the quarterly peak of economic activity, NBER claims that it occurred in the fourth quarter of 2019. The fact that the monthly and quarterly peaks did not coincide represents the "unusual nature" of this recession, according to NBER.

Researchers noted that although an economic downturn is usually determined by several months, they concluded that “the unprecedented magnitude of declining employment and production and the widespread reach of the entire economy” justifies this notion. Employment and domestic production are the main indicators used to measure economic activity.

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Since February, the coronavirus pandemic has taken a devastating toll on the U.S. economy, with more than 42 million Americans filing for unemployment benefits, the rate of which is about 13,3%, down from 14,7% in April.

In May, when some state economies began to reopen, 2,5 million jobs were restored in the economy, indicating a possible start to a recovery in the labor market.

But despite this, experts warn that the second wave of coronavirus can pose a serious threat to the US economy, notes Fox News.

A monthly review by the National Association of Business Economics (NABE), published on June 8, found that 87% of economists believe that the second wave of coronavirus is the main risk to the US economy this year.

According to data on June 9, the virus killed more than 113,5 thousand Americans, more than 2 million fell ill.

"Barring a possible second surge of Covid-19, the overall U.S. economy may have turned for the better, as evidenced by unexpected job growth, although it remains to be seen exactly what the new normal will look like," said Tony Bedikian, head of global markets. at Citizens Bank.

Despite a promising report, 80% of NABE respondents said they are pessimistic about the economic prospects of the United States.

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By the final quarter of this year, the country's gross domestic product, the broadest measure of goods and services produced in the economy, is expected to contract 5,6% - the sharpest contraction since World War II - after a disastrous 33,5% drop, according to for the second quarter.

Most economists do not expect the country to return to pre-crisis levels, at least until the second half of 2021.

51% of economists believe that the vaccine against the virus is the best factor that can help the US economy, and 29% said they consider testing and tracking policies to be such a factor that will mitigate the spread of the virus and ensure a wider re-opening of enterprises in the country.

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