In an announcement that surprised absolutely no one, the National Bureau of Economic Research declared on Monday June 8 that the US dropped into a recession after economic activity hit a monthly peak in February 2020. This expansion lasted 128 months, dating back to June 2009, the beginning of the last recession. It was reported to be the longest expansionary business cycle since such records began in 1854; however, it was also noteworthy for generating unspectacular annual growth rates.
A recession is typically understood as two consecutive quarters of economic contraction. Although the US has not yet officially registered a second consecutive quarter of decline in economic activity, it is a foregone conclusion given the depth, breadth, and speed of the contraction.
Economists expect that we are likely already in recovery – from a very low base – on a monthly basis now that large segments of the economy are reopening. With the economy registering 2.5 million additional jobs in May, this could end up being the shortest and the deepest recession on record. Although even the smallest movement in the positive direction would be enough to officially end a recession, there is still a long way to go before returning to pre-recession levels.
Although the expected speed of the recovery is being actively debated, many believe that further economic good news awaits. Consumers – having been cooped up in their homes for weeks on end – are starting to dine out and shop in stores in person. For instance, a recent survey showed consumers were not only looking forward to going to eat in restaurants but were planning on spending more to broaden their palates. Seasonal shopping for things such as outdoor recreation products and gardening supplies will further contribute to consumer spending activity. Additionally, reopened businesses are expanding output and often seeing sales gains.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions, as well as US and global macroeconomic updates surrounding the pandemic. Freedonia Custom Research is also available for questions requiring tailored market intelligence.