The National Bureau of Economic Research (NBER) reported Monday, June 8, that the US economy entered recession in February, marking the end of an economic expansion that began in June 2009.
The expansion lasted 128 months, the longest in the history of US economic cycles dating back to 1854. The previous record was held by business expansion which lasted 120 months from March 1991 to March 2001.
âA recession is a significant drop in economic activity distributed throughout 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 hits its low. Between trough and peak, the economy is expanding â, the NBER noted in his statement.
Mervin Jebaraj, an economist and director of the Center for Business & Economic Research at the University of Arkansas, said the call for recession was not unexpected and that he believed it could be a deep recession.
âIt’s no surprise that we are in a recession that began when economic activity slowed dramatically in response to the pandemic. This will turn out to be one of the deepest recessions, and it is unfortunate that it stems from the fact that the economy is finally strong enough to generate wage increases. The federal government’s fiscal response has been fairly decent so far, but it will take a lot more to keep household incomes stable for the rest of the year, âJebaraj told Talk Business & Politics.
The NBER committee also commented on the impact of COVID-19 on the economy’s push into recession.
âThe committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than previous recessions. Nonetheless, he concluded that the unprecedented scale of the decline in employment and output, and its wide impact on the economy as a whole, justifies the designation of this episode as a recession, even if it turns out to be shorter than previous contractions. “
When could the recession end? Economist Greg Kaza, director of Arkansas Policy Foundation, said he was monitoring four metrics.
âThe four coincident indicators will signal the end of the recession. These are wage employment, industrial production, real income minus transfer payments, and manufacturing and trade sales, âKaza noted.
Committee members involved in the decision were: Robert Hall, Stanford University (chair); Robert Gordon, Northwestern University; James Poterba, president of MIT and NBER; Valerie Ramey, University of California, San Diego; Christina Romer, University of California, Berkeley; David Romer, University of California, Berkeley; James Stock, Harvard University; Mark Watson, Princeton University.