It is now official — the National Bureau of Economic Research has declared that economic activity peaked in February of this year. That means the expansion that started in June of 2009 is now over, and we are officially in a recession.
In the past, the NBER has watched an economic decline for much longer before officially declaring a recession. But Teresa Ghilarducci, professor of economics and policy analysis at The New School in New York City, said this is no ordinary contraction.
“It would have been a bit ridiculous to wait to tell the world what we already knew and felt,” she said.
The NBER said the magnitude of production and employment declines warranted the official designation. Ghilarducci said what’s different this time is how quickly we went from full employment to double-digit rates of unemployment.
“It took two years in the 1930s to get to the kinds of rates that we’re seeing now,” Ghilarducci said.
In previous recessions, economist Peter Orazem at Iowa State University said unemployed people jumped to other jobs in less-affected industries. But this has been a nearly universal shutdown.
“That’s going to make it much more difficult for people to shift from one job to another as a way of surviving the economic consequences of the pandemic,” Orazem said. That could make it even harder to recover, he said.
COVID-19 Economy FAQs
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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